THE  LIBRARY 

OF 

THE  UNIVERSITY 
OF  CALIFORNIA 

LOS  ANGELES 

SCHOOL  OF  LAW 


A  TRUSTEE'S  HANDBOOK. 


TRUSTEE'S  HANDBOOK 


BY 


AUGUSTUS  PEABODY   LORING  , 

n  • 

A.B.,  I.I..H.,  HARV. 
OF    THE    SUFFOLK    BAB 


THIRD  EDITION 


BOSTON 
LITTLE,   BROWN,   AND  COMPANY 

1907 


Copyright,  1898,  1900,  1907 
Br  AUGUSTUS  P.  LOBING 


All  rights  reserved 


8.  J.  PAKKBILL  &  Co.,  BOSTON,  U.  8.  A. 


PREFACE  TO  THIRD   EDITION. 


THE  numerous  decisions  concerning  the  matters 
covered  in  this  Handbook  since  the  last  edition  have 
made  it  necessary  to  rewrite  and  enlarge  many  parts 
of  it,  particularly  those  parts  treating  the  trustee's 
liabilities  to  strangers,  extra  dividends,  and  interstate 
law.  It  has  been  found  necessary  to  cite  366  additional 

cases. 

AUGUSTUS  P.  LORING. 

BOSTON,  August  12,  1907. 


735227 


PREFACE   TO  FIRST  EDITION. 


THIS  little  book  is  meant  to  state,  simply  and  con- 
cisely, the  rules  which  govern  the  management  of 
trust  estates,  and  the  relationship  existing  between 
the  trustee  and  beneficiary. 

The  lack  of  a  Handbook  of  this  kind  has  led  me  to 
complete  and  publish  what  were  originally  notes  for 
personal  use  merely. 

As  the  book  is  for  general  as  well  as  professional 
readers,  the  citations  are  illustrative,  with  an  ap- 
proach to  completeness  only  where  the  law  is  doubt- 
ful or  conflicting.  But  pains  has  been  taken  to  notice 
the  peculiarities  of  local  State  law,  especially  where 
dependent  on  statute. 

I  wish  to  acknowledge  my  obligation  to  the  writers 
of  the  many  admirable  text  books  which  bear  on  my 
subject,  all  of  which  I  have  used  freely,  and  to  which 
I  have  referred  often  for  a  fuller  discussion  of  prin- 
ciples and  a  more  complete  citation  of  authorities ; 
and  I  have  to  thank  Mr.  Edward  A.  Howes,  Jr.,  for 
his  valuable  assistance  in  digesting  cases  and  passing 
this  volume  through  the  press. 

AUGUSTUS  PEABODY  LORING. 


NOTE. 


THE  citations  of  the  following  text  books  are  thus 
abbreviated :  — 

Lewin  on  Trusts,  9th  Eng.  ed.,  is  cited  as  "  Lewin." 
Perry  on  Trusts,  4th  Amer.  ed.,  2  vols.,  is  cited  as  "  Perry." 
Underhill  on  Trusts  and  Trustees,  Amer.  ed.  Wislizeuus-  is 
cited  as  "  Underhill." 
Flint,  Trusts  and  Trustees,  is  cited  as  "  Flint." 


CONTENTS 


EMI 

TABLE  OF  CASES     ,  w  MH*  •  i  xxiii 

PART   I. 

THE  TRUSTEE  AS  AN  INDIVIDUAL. 

Preliminary.     The  terms  of  the  trust  instrument  govern 

the  trust 1 

It  is  therefore  important  to  know  and  follow  them  .    .  1 

I.  THE  OFFICE  OF  TRUSTEE  is  NOT  ALWAYS  DESIRABLE  .  2 

Because  he 

Cannot  come  in  competition  with  trust  estate    .    .  2 

Cannot  delegate  the  management 2 

Cannot  render  expert  services  freely 2 

Is  restricted  in  his  dealings  with  the  beneficiary    .  2 

His  only  reward  —  compensation 3 

II.   DlSCLAIMEB        3-5 

Acceptance  necessary;   may  disclaim .  3 

But  dry  trust  may  vest  in  representatives  of  sole 

trustee ...  3 

No  special  form  of  disclaimer  is  necessary 3 

It  should  be  affirmative  and  decided 3 

By  deed.    In  Probate  Court  when  instrument  is  a 

will 4 

Must  disclaim  whole  trust 4 

May  disclaim  executorship  or  trusteeship 4 

Exceptions      4 

May  disclaim  one  of  two  separate  trusts 5 

Effect  of  disclaimer 5 

Vests  title  in  other  trustees 5 

Joint  power  lost  by ., 5 


X  CONTENTS 

PAOB 

III.  ACCEPTANCE -.-  ™  -fl  •»  v  .  •«  •.   .  6-7 

Should  be  formal .    . 5 

What  is  construed  as  an  acceptance    ........  6 

Presenting  will 6 

Doing  any  act  to  execute  trust 6 

Not  disclaiming  in  reasonable  time 7 

IV.  APPOINTMENT 7-13 

No  trust  fails  for  want  of  a  trustee .  7 

Temporary  trustee  may  be  appointed 7 

Appointment  under  terms  of  trust  instrument  ...  8 

How  THE  TBUSTEE  is  APPOINTED 8-9 

Must  be  ratified  by  court  when     . 8-9 

Court  will  appoint  when  there  is  no  adequate  pro- 
vision in  the  instrument   .    .  9 
when  donee  of  power  does  not 

act 9 

What  court  will  have  jurisdiction 9-10 

Appointment  not  complete  without  title  to  property  11 

May  vest  by  terms  of  trust  instrument 11 

May  vest  in  new  trustee  by  statute 11 

Decree  may  order  conveyances 12 

Appointees  of  court  must  give  bond 12 

Without  sureties  when 12 

Amount  required : 13 

V.  WHO  is  TBUSTEE 13-15 

Any  person  intermeddling  with  trust  property  .  .  13 
An  executor  investing  and  performing  duties  of 

trustee 14 

Where  a  second  set  of  trustees  appointed  under 

power 15 

VI.  WHO  CAN  BE  A  TBUSTEE 15-17 

Any  person  of  legal  capacity  to  hold  property  and 

exercise  power 15 

Such  person  may  be  a  corporation 15 

Who  cannot  be  a  trustee 15 

Lunatic  and  infant  may  be 15 

Trustee  should  be  "  capable  "  and  "  fit "  .  ...  16-17 
Bankrupt,  bad  character,  or  beneficiary  unfit  .  .  16 
Relationship  objectionable 16-17 


CONTENTS  Xl 

turn 

VII.  APPOINTMENT  OF  TRUSTEE 18 

Maker  may  choose  whom  he  will 18 

Donee  of  power  must  choose  honestly  and  reasonably  18 
Courts  will  only  appoint  proper  persons   ....      18-19 

Or  such  person  as  all  agree  on 19 

Public  trustees  in  Colorado 19 

VIII.  DEVESTMENT  OF  OFFICE  .    .    .    . 19-24 

By  extinguishment  of  trust  or  completion  of  duties  19 

By  death  or  disability  office  vests  in  survivors  ...  19 
If  sole  trustee  dies  or  is  removed,  office  vests  in 

successor 20 

Cannot  abandon  trust 20 

Resignation 20-22 

Must  be  accepted  either  by  all  interested  ....  21 

Who  are  interested  for  this  purpose 21 

Or  by  court.    What  court 21 

Where  there  is  more  than  one  trust  in  same  in- 
strument, must  resign  both  unless  devisable  .    .  22 

Removal 22-24 

Matter  is  addressed  to  discretion  of  court  ...  22 

Probate  Court  has  statutory  jurisdiction  ...  22 

Any  court  of  equity  in  absence  of  statute  ...  22 

All  interested  in  trust  are  parties 22 

Removed  for 

Waste  and  mismanagement 23 

Wilful  breach  of  trust 23 

Property  insecure 23 

Unreasonable  prejudice 23 

Unreasonable  disagreement 23 

Will  not  remove 

For  poverty 24 

Caprice  of  beneficiary 24 

Unpleasant  relations  with  beneficiary    ....  24 
For  non-exercise  of  or  manner  of  exercise  of 
discretionary   powers,   unless   prejudiced  or 

unreasonable 24 

For  technical  breach  of  trust 24 

For  breach  of  trust  through  mistake 24 


CONTENTS 

PART    II. 

THE   INDIVIDUAL  AS  TRUSTEE. 
I.    INCIDENTS    OF   THE   TRUST   ESTATE. 


The  legal  and  equitable  estate  in  every  trust 25 

OWNEBSHIP  OF  TRUST  PROPERTY  ABSOLUTE  IN  TRUSTEE  .     25-26 

Incidents  of  ownership  fall  to  trustee 26 

Suing  and  being  sued .  26 

No  right  of  action  if  trustee  barred 27 

Is  stockholder  in  corporation 27 

Is  personally  bound  by  contracts 28 

Is  liable  to  taxation 29 

Liable  as  owner  of  property 30 

Is  liable  in  tort  and  criminally 31 

OWNERSHIP  NOT  BENEFICIAL 32-35 

Can  take  nothing  but  established  compensation  ...  32 

Cannot  set  off  debts  in  equity 32 

Cannot  use  the  property 32 

Cannot  buy  the  trust  property 32 

Cannot  borrow  trust  property  .    .    .  • 33 

Cannot  buy  up  claims  at  discount 34 

May  in  some  States  render  estate  expert  services  for 

hire,  in  others  not 34 

Must  account  for  any  benefit  received 35 

OWNERSHIP  SHOULD  NOT  BE  A  BURDEN 35-36 

Can  charge  legitimate  expenses.    What  are  ....  35-36 

Entitled  to  reasonable  compensation.    What  is  .    .  36-44 

Commissions  allowed  in  various  States   .  39-44 


TRUSTEE'S  ESTATE 44-52 

In  real  estate;   only  what  is  needed  ..........       44 

In  personal;    absolute 44 

In  Code  States,  no  title,  and  is  holder  of  power  only  .       44 

Is  entitled  to  possession  at  law 45 

Possession  of  beneficiary  is  that  of  trustee 45 

Estate  is  joint;  cannot  be  severed 45-46 


CONTENTS  Xlll 

PAOB 

TRANSMISSION  OF  THE  TBUSTEE'S  ESTATE. 

Alienation     .    . 46-52 

Inter  vivos 46-51 

May  convey  at  will.    Effect  of  conveyance 46 

Purchaser  for  value  without  notice,  who  is  and  is 

not      46-47 

Title  will  not  pass  under  general  assignment  ...       47 
Cannot  be  taken  for  trustee's  individual  debts  .    .       48 

Subject  to  execution  for  trust  debts 48 

To  what  extent 49 

Set-off 49 

Title  passes  to  remainderman  even  if  equitable  .    .       50 

Passes  to  successor;    how 50 

Forfeiture 51 

On  death  of  trustee 51 

Vests  in  survivor 51 

On  death  of  sole  trustee  vests  in 51-52 

General  devisee  when 51 

Heir  or  personal  representatives  when 52 

II.    POWERS. 

IN  GENEBAL. 
What  powers  treated -.«•••• 52 

WHAT  POWEBS  A  TRUSTEE  HAS .     52-53 

As  incidental 53 

Granted  by  court  or  statute 53 

Granted  by  maker  of  trust 53-54 

VESTING  OF  POWEBS 54 

When  powers  do  not  vest  in  trustee 54 

Vest  in  all  trustees  jointly 54 

Pass  to  successors  and  survivors  when  .......  54 

General  powers ,  .  ,.,  .•„......  54 

Special  powers 55 

EXECUTION  OF  POWEBS 55 

The  essential  part  of  a  power .  ,.   .   .       55 

Joint  execution  necessary 55-56 

Exception  about  collecting  money 56 

DELEGATION .,.....,..    56-57 

Cannot  delegate  essentials 57 

Can  delegate  non-essentials 57 


XIV  CONTENTS 


PARTIAL  OB  DEFECTIVE  EXECUTION    .........     58-59 

Defective  execution  aided  for  purchaser  ......       58 

Substantial  execution  of  essentials  confirmed  ....       58 

Literal  execution  of  prescribed  non-essentials  neces- 
sary   .....................       58 

Consent,  etc  ..................     58-59 

CONTBOL  OF  COUBT  OVEB  EXECUTION   ..........         59 

Will  control  obligatory  powers    .........     59-60 

Will  ratify  when    ................       60 

Extent  of  control  of  discretionary  powers    ....     60-63 

Will  not  inquire  reasons   ............       61 

May  consider  reasons  if  given   ..........       61 

Practically   require  reasonable  exercise    ......       63 

Will  set  aside  for  fraud  .............       63 

EXTINCTION  OF  POWEBS   ...............  64 

By  death  of  person  having  discretion   .......  64 

Expiration  or  accomplishment  of  trust  .......  64 

Exhausted  by  what   ...............  64 


III.    PARTICULAR   POWERS. 

POWEB  OF  SALE 64-73 

Not  a  general  power 64 

Usual  power  in  trust  instruments 65 

Usual  power  under  statutes 66 

Court  of  equity  may  decree  sale 68 

EXECUTION  OF  POWEB 68-70 

Must  be  accurate 69 

Defective  aided  when.     Under  statutes 69 

By  court 69 

Purchaser  takes  risk  of  what 70 

Purchaser  must  see  to  application  of  purchase  money 

when      71 

PLEDGE  OB  MOBTGAGE 71-72 

Not  a  general  power 71 

When  given  by  statute • 72 

Court  will  not  order 72 

Power  to  sell  does  not  include 72 

May  give  power  of  sale  mortgage 72 


CONTENTS  XV 

PAOI 
PARTITION  AND  EXCHANGE 73 

LEASING 73-75 

What  leases  trustee  can  make 73 

What  leases  are  binding 73 

Special  power  to  lease 74 

Liability  on  covenants 75 

To  SUE  AND  DEFEND 75-76 

May  incur  expense 75 

All  trustees  must  join 75 

What  admissions  bind 76 

May  compromise 76 

To  CONTEACT 77-78 

Express  contracts  bind  estate  when 77 

Trustee  personally  bound  by  contracts 77 

Signing  as  "  trustee  " 78 

How  trust  estate  is  reached 78 

MAINTENANCE  AND  SUPPORT 79-82 

General  power  when 79 

Special  power  how  exercised 79 

Mainly  discretional 79-80 

General  power  how  exercised 80 

Discretion  as  to  amount 81 

Discretion  as  to  amount  reviewed  when  ....       81 
Discretion  as  to  apportionment  when  more  than 
one  beneficiary 81-82 

MISCELLANEOUS       82 

Revocation 82 

Appoint  successor 83 

IV.     DUTIES. 

DUTIES  TO  THE  BENEFICIARY  OWING  TO  STATUS 83 

To  support  if  unable  to  care  for  self 83-84 

When  others  have  duty  to  support 84 

Beneficiary  is  not  a  stranger  in  matters  outside  of 

trust      85 

Contracts  with  beneficiary 85 

Must  not  take  advantage  of  position 85 

Such  transaction  may  be  set  aside 86 

May  accept  employment  from  beneficiary 86 


XVI  CONTENTS 

PAG* 

DUTIES  IN  EXEBCISE  OF  OFFICE 86 

Must  exercise  utmost  good  faith  in  execution  of  trust  86 

Must  be  loyal  to  its  and  the  beneficiary's  interests  .    .  87 

Must  not  aid  adverse  claimants 87 

Must  not  come  in  competition 87 

Must  consider  interests  of  trust  exclusively  in  its 

management 87 

Must  prosecute  suits 88 

Must  not  release  securities 88 

DUTY  TO  EXERCISE  TRUST  PERSONALLY 88 

Cannot  delegate  to  co-trustee  or  agent 88 

May  employ  agent  where  there  is  necessity 89 

May  employ  agent  to  perform  ministerial  acts    ...  90 

Distinction  between  handling  income  and  principal   .  89 

DUTY  TO  ACCOUNT 91-95 

Must  keep  separate  and  accurate  accounts 91 

Books  open  to  inspection  of  beneficiary 91 

Must  settle  accounts  periodically 91 

Entitled  to  settlement  of  account 91 

Form  of  account 92-93 

Effect  of  account 94 

Account  in  court 94 

Account  between  parties 95 

Expense  of  accounting 95 

WHERE  THE  TRUSTEE  is  IN  DOUBT  AS  TO  HIS  DUTY  .   .     96-98 

May  notify  beneficiary 96 

May  get  instructions  of  court  where  duties  are  doubt- 
ful      96 

Cannot  get  instructions  to  enlighten  ignorance  ...  96 

Proper  form  of  raising  questions 97 


V.   MANAGEMENT  OF  FUND. 

What  may  be  trust  property 98 

MUST  TAKE  STEPS  TO  SECURE  PROPERTY  AT  ONCE  .   .   .  98-102 

Real  estate.     Place  title  in  joint  names 99 

Take  possession  of      99-100 

Personal  property.    Receipt  for  to  settlor 100 

May  not  come  into  possession  at  once 100 

Must  examine  predecessor's  account 101 


CONTENTS 

PAOB 

Transfer  of  stocks  necessary 101 

Notice  in  case  of  equitable  claims 101 

Should  sue  on  all  claims 102 

CASE  AND  CUSTODY 102-105 

Real  estate.    Should  require  tenant  to  attorn  or  take 

possession 102 

Personal  property.    Trust  chattels 102 

Money 103 

Non-negotiable  securities 104 

Negotiable  securities 104-105 

CONVEBSION 105-109 

Usually  necessary  to  some  extent 105 

What  should  be  converted 106-107 

Business,   partnership,   speculative,   unproduc- 
tive,  undivided,   or  generally   property  not 

trust  securities 106-107 

Liability  for  delay 106 

What  need  not  be  converted 107 

Maker's  reasonable  investments 107 

Securities  at  a  premium 107 

Property  to  be  enjoyed  in  specie 107 

CONVEBSION  OF  REAL  INTO  PERSONAL  OB  THE  REVERSE   .     .       107 

May  not  convert  without  authority 108 

What  is  a  conversion 108 

Authorized  by  statute 108-109 

Authorized  by  court 109 

Cy  pres 109 

Infant's  estate 109 

Implied  authority ,  .   .    .    .  109 

INVESTMENTS 109-124 

Must  keep  funds  invested  at  all  times 109 

Liable  for  simple  interest 110 

Liable  for  compound  interest  when 110 

Change  investments   when 110-111 

Must  invest  securely  and  to  get  current  return  ...     Ill 

Trust  investments,  what  are .     112 

Determined  by  statute 113 

Determined  by  court .     113-115 

Classes  of  investment  disapproved  .    .    .  ...  .    .    ..     115 

ft 


Xviii  CONTENTS 

PAU 

Must  exercise  a  sound  discretion 116 

What  is  sound  discretion 116 

Determined  by  condition  of  affairs  at  time  of  in- 
vesting   116 

Margin  of  security 116 

Proportion  in  one  security 116 

Investments  allowed  in  various  States 117-121 

PRINCIPAL  AND  INCOME 121-142 

Need  of  dividing 121 

Receipts.    The  estate  paid  in  is  principal 122 

Proceeds  of  conversion  of  securities  ....     123 

Damages  recovered .     123-124 

Grain  and  loss 124 

Advance  or  depreciation  in  value 124-127 

Timber  and  gravel 125 

Chattels 125 

Farming  stock 125 

Accumulated  income 126 

Dividends.     Current 126-135 

On  wasting  investment 126 

Extra   dividend 127-134 

Stock  dividend 128-129 

Delayed  dividends 135 

Rents 135 

Interest,  generally  income 136 

May  require  apportionment 136 

Bonds  bought  at  premium 136 

Apportionment  at  end  of  life  estate 136 

PAYMENTS 137-145 

Discharge  of  encumbrances 137 

Alterations  and  repairs 138 

When  principal  and  when  income 138 

On  newly  acquired  property 138 

Taxes.     Ordinary 139 

Betterment  and  extraordinary 140 

Insurance.     Premiums 140-141 

Proceeds  of  policy 141 

Expenses.    Care  of  property 141 

Brokers'  charges      142 

Legal  expenses 142 

DISTBIBUTION 142-145 

At  risk  of  trustee  .  142 


CONTENTS  x'lX 

PAOE 

May  have  decree  of  distribution 143 

Who  bound  by  decree 143 

Should  not  be  by  fictitious  account .    .  144 

Payment  to  an  attorney ;  .   .   .  144 

Compensation  for •...-.,  1   .  145 


VI.    TRUSTEES'  LIABILITIES. 

To  STBANGEBS.     (See  Incidents  of  Ownership,  supra.)     145-147 

Criminally  for  embezzlement 147 

To  BENEFICIABIES 147-156 

Are  joint  and  several 147 

Each  transaction  stands  alone 147 

For  neglect  of  duty 147 

Whether  damage  is  directly  or  indirectly  the 

result 148 

For  crimes  of  strangers  where  there  is  neglect  .  148 

Not  for  act  and  default  of  co-trustee 148 

Unless  one  joined  in  the  breach  of  trust  ....  149 

Or  contributed  by  neglect 149-150 

Or  gave  joint  bond 149 

Contribution  from  co-trustee 151 

For  errors  of  judgment 151-154 

In   investing 152 

Paying  to  wrong  person 152 

Must  use  average  discretion 152 

Otherwise  where  discretionary  power 153 

May  be  limited  by  terms  of  trust 153 

Measure  of  damage 154 

Interest  simple.      Compound   when 154 

May  be  required  to  replace  property 154 

Liability  terminated 155 

By  death 155 

Release 155 

Account  and  apportionment  of  successor  ....  155 

Statute  of  limitations 156 

Insolvency 156 

Successor's  taking  over  property  .    .....  :.  ..   .>  .  155 


XX  CONTENTS 

PART  III. 

THE    BENEFICIARY. 

PAOI 

I.    WHO  MAT  BE  A  BENEFICIARY 157 

Who  is  the  beneficiary 158 

II.    THE  ESTATE  OF  THE  BENEFICIARY 158-168 

Incidents  of  the  equitable  estate 159 

Will  descend  like  other  property 160 

Dower  and  curtesy 160 

May  be  alienated 160 

What  estate  passes 161 

Priority 161-162 

Notice 162 

Restraint  on  alienation 163 

Tendency  of  modern  jurisprudence 163 

Exception  as  to  married  women 164 

Rules  in  various  States 164-166 

Spendthrift  trust  made  by  cesser 166 

Support  of  family 167 

Condition  over  on  alienation 167-168 

III.  RIGHTS  OF  BENEFICIARY  AGAINST  TRUSTEE  .    .    .     168-179 

Where  enforced 168-169 

How  enforced 169 

Can  compel  what 169-170 

Damages  for  breach  of  trust 170-171 

Special  rights .    .    .      171-176 

Right  to  information 171 

Right  to  income 171-172 

Right  to  support 173 

Right  to  conveyance 173-175 

Right  to  possession 175-176 

Rights  lost 176-179 

By  release 176 

Assent ,  .. 177 

Acquiescence 177-178 

Statute  limitations 178 

IV.  RIGHTS  AGAINST  STRANGERS 179-184 

To  constitute  transferee  of  property  trustee  .    .      179-182 

May  follow  as  long  as  can  identify 180 

Money  may  be  followed 180 


CONTENTS 

BAM 

Must  elect  whether  to  hold  trustee  or  follow  .  .  .  182 

Rights  to  pursue  stranger  aiding  breach  of  trust  .  .  182 

What  is  notice  of  trust 182 

Rights  where  disturbed  in  possession 183 

V.    LIABILITIES 184 


PART  IV. 

INTERSTATE   LAW. 

The  construction  of  the  settlement 186 

The  execution  of  the  trust 187 

Where  the  trust  exists 188 

When  the  trustee  is  appointed  by  the  settlor  .    .  188 

When  the  trustee  is  appointed  by  judicial  decree  189 

Non-resident  trustee 191 

Foreign  investments 193 

Taxation    . 193 


TABLE  OF  CASES 


PAOI 
A. 

Abbott,  Pct'r  47 

v.  Foote  50,  185 

Abell  v.  Brady  39,  41 

Adair  v.  Brimmer  177 

Adams  v.  Adams  7,  137 

Albert  v.  Baltimore  182 

Aldrich  v.  Aldrich  62-81 

v.  Barton  94 

Allen  v.  Gillette  32 

Alley  v.  Lawrence  59 

Ailing  v.  Ailing  84,  85 

.Allis'  Estate  121,  136 

Alston,  In  re  123 

Ames  v.  Armstrong  149 

v.  Scudder  103 

Amory  v.  Green  115,  193 

v.  Lowell  94,  95,  140 

Anderson  v.  Daley  169 

v.  Mather  108 

Angus  v.  Noble  6,  14 

Ansley  v.  Pace  67,  68 

Anthony  v.  Caswell  29 

Arguello,  In  re  103 

Armory  Board,  In  re  11 

Arnold  v.  AJden  .    40 

v.  Brown  32 

v.  Gilbert  60 

Arnould  v.  Grimstead  111 

Atkins,  In  re  106 

v.  Albree  134 

Att'y  Gen.  v.  Alford  110 

v.  Briggs  67 

v.  Gleg  45,  55,  57 

v.  Landerfield  15 

v.  Proprietors  of  Old  South 

Meeting  House  180 

Aubert's  Appeal  186 

Avery,  In  re  119 

Aydelott  v.  Breeding  118 

Ayres  v.  Slebel  &  Co.  189 


B. 

Babcock  v.  Hubbard  40 

Bacon  v.  Bacon  61,  62 

Badger  v.  Badger  177 


Baer's  Appeal 
Bagshaw  v.  Spencer 
Bahin  v.  Hughes 
Bailey,  Pet'r 
v.  Lloyd 


PAGE 
120 

44 
151 

54 
163 


v.  New  England  Mut.  L. 

Ins.  Co.  183 

Bailey's  Trustee  v.  Bailey         174 
Bailie  v.  McWhorter  165 

Baker  v.  Lorillard  67,  68 

v.  Tibbetts  30 

Balch  v.  Hallett  126 

Ball  v.  Safe  Deposit  &  Trust 

Co.  67 

Barbour  v.  Cummings      56,  62,  63 
Baring  v.  Willing  145 

Barker's  Trusts,  In  re  16 

Barker  v.  Barker  170,  182 

v.  Mercantile  Insurance 

Co.  27 

Barnes  v.  Dow  165 

Barney  v.  Parsons  121 

Barrell  v.  Joy  36,  41 

Barrett  v.  Hartley  37,  85 

Barroll  v.  Forman  71 

Bartlett  v.  Bartlett  160 

Bassett  v.  Fidelity  &  Deposit 

Co.  13,  87 

v.  Granger  95 

Batchelder  v.  Central  Bank      183 
Bate  v.  Hooper  121,  185 

Bateman  v.  Davis  58 

Bates  v.  McKinlay  132,  135 

v.  Underbill  150 

Bayard  v.  Farmers'  &  Me- 
chanics' Bank  182,  183 
Beach  v.  Beach  26,  45 
Beatty's  Estate  150 
Beck  Lumber  Co.  v.  Rupp  48 
Belchier,  Ex  parte  90 
Belknap  v.  Belknap  161 
Belmont  v.  O'Brien  54 
Beloved  Wilkes'  Charity,  In  re  61 
Bemmerly  v.  Woodward  154 
Benedict  v.  Dunning  55 
Benjamin  v.  Gill  87 
Bennett  v.  Bennett  174 

v.  Colley  178 

v.  Peirce  94,  95,  160 


XXIV 


TABLE   OP   CASES 


Bennett  v.  Wyndham 
Bentley  v.  Dixon 
Bergengren  v.  Aldrich 
Berger  v.  Duff 
Bertron  v.  Polk 
Bethel  v.  Abraham 


PAOB 
31 

6,  14 

74 

57 

60 

60,  61 


Biddle's  Appeal  37,  38,  134 

Billings  v.  Warren  122 

Billington's  Appeal  108 

Bingham's  Appeal  187 

Bircher   v.    St.    Louis   Sheet 

Metal  Co.  181 

v.  Walther  181 

Bird  v.  Chicago,  I.  &  N.  Rail- 
road 183 
Birmingham  v.  Wilcox       147,  150 
Black  v.  Ligon                         74,  75 
Blacklow  v.  Laws  68 
Blair  v.  Cargill                            185 
Blake  v.  Pegram      37,  38,  95,  96, 
147,  149,  150 

v.  Traders'  Nat'l  Bank       13, 
178,  179,  182 

Blauvelt  v.  Ackerman  91 

BIythe  v.  Green  61,  79,  126 

Board  of  Charities  v.  Ldck- 

hard  167 

Bogle  v .  Bogle  20 

Bohlen's  Estate  66 

Boon  v.  Hall  72,  108 

Borel  v.  Rollins  73 

Bostick  v.  Winton  63 

Bostock  v.  Floyer  57,  88,  148 
Boston  v.  Doyle  7,  55 

v.  Rohbins  76 

Boston  Safe  Deposit  &  Trust 

Co.  v.  Mixter  66 

Bostwick,  In  re  84 

Bosworth,  In  re  96 

Bouch  v.  Sproule  128 

Boulton  v.  Beard  153 

Bourquin  v.  Bourquin  87,  169 
Boursot  v.  Savage  45 

Bovey  v.  Smith  187 

Bowditch  v.  Banuelos  12,  18,  21 
Bowen  v.  Penny  145 

Bowers  v.  Evans  181 

Bowes  v.  Seeger  56 

Bowker  v.  Pierce  37,  85,  107 

Boyd  v.  Oglesby  43 

Boyer's  Estate  136 

Boys  v.  Boys  107 

Bradbury  v.  Birchmore  36,  49 
Bradby  v.  Whitchurch  96,  170 
Bradford  v.  King  188,  190 

Bradlee  v.  Andrews  80 

Bradley  v.  Chesebrough  180 


PA«M 

Bradshaw  v.  Fane  73 

Bradstreet  v.  Butterfleld  158 
Brandenburg  v.  Thorndike        175 

Brander  v.  Brander  126 

Braswell  v.  Morehead  125 

Bresee  v.  Bradfleld  85 

Brice  v.  Stokes  151,  176 

Bridge  v.  Bridge  139,  141 
v.  Connecticut  Life  Ins. 

Co.  161 

Bridges  v.  Longman  72 

Briggs  v.  Light  Boat  15 

Brimley  v.  Grou  128,  134 

Briscoe  v.  State  40 

Brittlebank,  In  re  63 

Broadway  Nat'l  Bank  v.Adams  164 

Bronson  v.  Thompson  33 

Brooks  v.  Jackson  39 

Brough  v.  Higgins  141 

Broughton  v.  Broughton  34 

Brown  v.  Berry  80,  84 

v.  Desmond  168,  189 

v.  French  116 

v.  Gallatly  106 

v.  Lambert's  Adm'r  14 

v.  Macgill  164 

v.  Mercantile  Trust  Co.       82 

v.  Ricketts  33 

v.  Wright  118 

Browne  v.  Cross  178 

Bull  v.  Bull  61 

v.  Walker  118 

Bullard  v.  Chandler  97 

Bullock,  In  re  166 

Bumgarner  v.  Cogswell  11 

Burgess  v.  Wheate  159,  160 

Burnett  v.  Lester  125 

Burnham  v.  Earth  181 

Burr  v.  McEwen  102 

Burwell  v.  Mandeville's  Ex'or    78 

Bushong  v.  Taylor  77 

Busk  v.  Aldam  15 

Byrne  v.  McGrath  180 


0. 

Caldecott  v.  Brown  138,  139 

Calhoun  v.  Ferguson  125 

Campbell  v.  Miller  118 

Cann  v.  Cann  109 

Canoy  v.  Troutman  46 

Carey  v.  Brown  26 

Carney  v.  Byron  174 

Carpenter  v.  Cook  58 

Carruth  v.  Carruth  4,  5,  22 

Carson  v.  Carson  14 


TABLE  OP  CASES 


XXV 


Gary  v.  Slead 
Casey  v.  Canavan 
Casparl  v.  Cutcheon 
Cassell  v.  Ross 
Cathaway  v.  Bowles 
Catherwood's  Appeal 
Cauhape  v.  Barnes 
Cavin  v.  Gleason 


174 
65 

118 
70 

144 
62 
11 

181 


Central  Trust  Co.  v.  Johnson  41 
Chadbourn  v.  Chadbourn  7(5,  97 
Chadwlck  v.  Heatley  145 

Chambersburg     Ins.     Co.     v. 

Smith  169 

Chapin  v.  First  Unlversallst 

Society  45 

Chase  v.  Chase      62,  84,  169,  190 
v.  Searls  161 

Chatham  v.  Rowland  77 

Chawner's  Will,  In  re  72 

Cherry  t\  Richardson  50 

Chester  v.  Rolfe  75 

Chesterman,  In  re  172 

Chestnut  Nat'l  Bank  v.  Fidel- 

ity Ins.  &  Trust  Co.  82 

Cheyney  v.  Geary  161 

Chlsholm  v.  Hammersley    96,  142 

Claflln  v.  Claflln  173 

Clapp  v.  Ingraham  162 

Clark  v.  Beers  113,  117 

v.  Blacklngton    92,  155,  190, 

192 

v.  Clark  45,  62,  88,  150 

v.  Hayes  67 

v.  Iowa  City  136 

V.  Platt  40 

v.  Wright  182 

Clarke  v.  Cordla  76 

v.  Deveaux  158 

v.  Hogemann  162 

Cleaveland  v.  Draper  143 

Cleveland  v.  Hallett  44 

v.  State  Bank  73 

Cllve  v.  Carew  168 

v.  Cllve  135 

Clough  v.  Dixon  103 

Cobb  v.  Fant  43,  131,  133 

Cochrane  v.  Snell  165 

Codman  v.  Krell  186 

Coffin  v.  Bramlitt  119 

Coffman  v.  Gates  184 

Cogblll  v.  Boyd  99 

Colburn  v.  Grant  89 

Coleman,  In  re  82,  166 

v.  San  Rafael  Turnpike 

Road  Co.  157 

Colgate  v.  Colgate  32 

Collier  v.  Munn  34 


PAOB 

Collins  v.  Serverson  81 

Colllster  v.  Fassltt    56,  62,  63,  80 
Colton  v.  Colton  62 

Cone  v.  Cone  9 

Conger  v.  Conger 

Connally  v.  Lyons  78,  146 

Connolly's  Estate  132 

Conybeare's  Settlement,  In  re    16 
Cooley  v.  Scarlett  168,  189 

Coombs  v.  Jordan  71 

Copeland  v.  Manton  162 

Corle  v.  Monkhouse  123 

Corsellls,  In  re  34 

Corya  v.  Corya  103 

Costabadle  v.  Costabadle  61 

Courtier,  In  re  59 

Cousins'  Estate  117,  153 

Cowley  v.  Wellesley  125 

Cowman  v.  Colquhoun  67 

Cowper  v.  Stoneham  182 

Cowx  v.  Foster  163 

Cox  v.  Cox  122 

Crabb  v.  Young  60,  153 

Craig  v.  Craig  20,  22 

Crane  v.  Hearn  149 

Crawford  County  Commis- 
sioners v.  Patterson  180 
Creveling  v.  Fritts  33 
Crocker  v.  Dillon  14,  100,  184 
Cromle  t;.  Bull  .  62,  63 
Cross  v.  United  States  Trust 

Co.  186 

Cruger  v.  Halllday  21 

Gulp's  Estate  24 

Cummins  v.  Cummins  112 

Cunard's  Trusts,  In  re  5 

Curtis  v.  Lakin  178 

v.  Osborne  130,  136 

v.  Smith        10,   62,   169,  188, 

189,   190,   191 

Cushman  v.  Goodwin  181 


D. 

Daggett  v.  White 
Dagley  v.  Tolferry 
Dally  v.  Wright 
Daland  v.  Williams 
Danahy  v.  Noonan 
Darcy  v.  Croft 
Davidson  v.  Janes 


4 
152 

38 
130 
174 
140 

50 


Davis'  Appeal  (Pennsylvania)     43 
Davis,  Appellant  (Massachu- 
setts) 63,  112,  116 
Pet'r  67 


XXVI 


TABLE  OF   CASES 


PAGE 
Davis  v.  Charles  River  Branch 

Railroad  26 

v.  Coburn  178 

•».  Harman  121 

v.  Jackson  130 

Davison  v.  Tarns  145 

Davoue  v.  Fanning  33,  155 

Dean  v.  Lanford  17,  20 

Dedham  v.  Natick  84 

Deg  v.  Deg  180 

DeKoven  v.  Alsop      97,  128,  129, 

130,  134,  135 

Denegre  v.  Walker  68 

Denike  v.  Harris  111 

Denholm  v.  McKay  33,  177 

DePeyster  v.  Ferrers  52 

Devin  v.  Hendershot  26 

Dexter  v.  Cotting  12,  158 

v.  Phillips  136 

Diamond  v.  Wheeler      28,  76,  78, 

146 

Dickinson's  Appeal  114,  116 

Dickinson  v.  New  York  Bis- 
cuit Co.  66,  70 
Dillingham  v.  Martin  55 
Disbrow  v.  Disbrow  23 
Dixon  v.  Dixon                             182 
v.  Homer                    37,  39,  46 
Docker  v.  Somes  33 
Dodd  v.  Wilkinson               20,  156 
v.  Winship         50,  92,  94,  98 
Dodds  v.  Tuke                         36,  49 
Dodkin  v.  Brunt                        7,  22 
Dodson  v.  Ashley  65 
Doe  d.  Raikes  v.  Anderson          48 
D'Ooge  v.  Leeds                          129 
Dorr  v.  Boston  29 
v.  Wainwright        4,  103,  175 
Dover  v.  Denne                               89 
Downes  v.  Bullock                       121 
Dowse  v.  Gorton              31,  48,  78 
Drake  v.  Crane                           119 
v.  Price  14 
v.  Rice                                  161 
Draper  v.  Stone                  154,  181 
Dry  Goods  Co.  v.  Gideon              33 
Dublin  Case  15 
Dunglison's  Estate                     162 
Dunn  v.  Dunn                               160 
Durkin  v.  Langley  77 
Dyer  v.  Riley                               104 


E. 

Eakle  v.  Ingraham 

Earl  Cowley  v.  Wellesley 


174 
125 


PAOI 

Earp's  Appeal  124,  131,  132,  133 
Edwards  v.  Edwards  97,  122,  140 
Kidman  v.  Bowman  134 

Eisnew's  Appeal  134 

Eldredge  v.  Heard  60,  62,  63 

Eliott  v.  Sparrell  110 

Ellicott  v.  Kuhl  181 

Ellig  v.  Naglee  60,  76 

Ellis  v.  Barker  87 

v.  Boston,  Hartford  & 

Erie  Railroad     5,  11,  20 

v.  Ellis  37 

Elting,  In  re  94,  134 

Ely  v.  Pike  72 

Emery  v.  Batchelder        118,  144, 

190,  192 

English  v.  Mclntyre  187 

Enohin  v.  Wylie  187 

Ervine's  Appeal  67,  83,  107 

Evangelical  Synod  v.  Schoe- 

neich  181 

Evans'  Estate  89,  182 

Evans  v.  John  3 

v.  Weatherhead  36 

Everett  v.  Drew  26,  77 


F. 

Fairbanks  v.  Sargent  162 

Fairland  v.  Percy  49 

Fanning  v.  Main  172 

Farmers'  Loan  &  Trust  Co., 

In  re  147 

v.  Lake  Street  Elevated 

Railroad  22 

v.  Pendleton  191 

Faussett  v.  Carpenter  48 

Fay  v.  Haven  187,  190 

Felch  v.  Hooper  169 

Feltham  v.  Turner  62 

Fenwick  v.  Greenwell  148 

Fernstler  v.  Seibert  183 

Fidelity  Co.  v.  Glover  118 

Fidelity  Insurance  Co.  v.  Nel- 
son 190 
Fidler  v.  Higgins  108 
Field  v.  Field  104 

v.  Middlesex  Banking  Co.    85, 
177 

v.  Wilbur  79 

Finlay  v.  Merriman  120 

First  Nat'l  Bank  v.  Mortimer  167 

v.  Nat'l  Broadway  Bank   188 
First  Nat'l  Bank  of  Carlisle 

v.  Lee  125 

Fisher  v.  Wister  168 


TABLE  OF  CASES 


XXV11 


Fitzgerald,  In  re 

v.   Rhode  Is! 

tal  Trust  Co. 
Fleming  v.  Wilson 
Fletcher  v.  Greene 
Flint  v.  Clinton  Co. 
Flowers  v.  Franklin 
Foil  v.  Newsome 
Foote  v.  Cotting 
Forbes  v.  Lothrop 
Ford  v.  Brown 
Forster  v.  Davies 
Forward  v.  Forward 
Fosdick   v.   Town 

stead 
Foster  v.  Bailey 

t;.  Cockrell 

v.  Elsley 

v.  Foster 

v.  Smith 
Fox  v.  Storrs 
Franklin  v.  Osgood 
Franklin    Savings 

Taylor 

Frazer  v.  Western 
Freedman's  Co.  v.  Earle 
Freeman  v.  Cook 
Frellnghuysen  v.  Nugent 
French  v.  Westgate 
Frere  v.  Winslow 
Frierson  v.  Branch 
Fritz  v.  City  Trust  Co. 
Fryberger  v.  Turner 
Furness  v.  Leupp 
Fyler  v.  Fyler 


G. 

Gamble  v.  Gibson 
Garesche  v.  Levering 

merit  Co. 

Garesch6  v.  Priest 
Garland  v.  Garland 
Garvey  v.  Garvey 
Gasquet  v.  Pollock 
Geaves,  Eat  parte 
George,  In  re 
Gerry,  In  re 
Gibbons  v.  Mahon 
Gilford  v.  Thompson 
Gllkey  v.  Paine 
Gill,  In  re 

v.  Carmine 
Gillesple  v.  Smith 
Gil  more  v.  Tuttle 
Gisborne  v.  Gisborne 


PAOK 

PAOE 

39 

Gleason  v.  Boston 

84 

id  Hospi- 

Glenn  r.  Allison 

28,  146 

2o.               139 

Glink  v.  La  Fayette 

18 

41 

Gloyd's  Estate 

41 

164 

Good  v.  Lickorish 

166 

7 

Goodrich  v.  Proctor 

65 

125 

Goodson  v.  Ellison 

173 

66 

Gordon  v.  West 

42,  141 

78 

Gott  v.  Cook 

62 

161,  168 

Graham's  Estate 

124 

47 

Graham  v.  Austin 

89,  150 

24 

v.  King 

69,  88,  90 

1                      35 

v.  Roberts 

140,  141 

)f   Hemp- 

Granger  v.  Bassett 

129,  135 

157 

Gray  v.  Corbit 

164 

145 

Greason  v.  Keteltas 

73 

162 

Green  v.  Bissell 

130 

98,  157 

17.  Crapo 

116 

94,  95 

Greene  v.  Greene 

123 

168 

v.  Mumford 

29,  96,  97 

19 

v.  Smith                    80,  85,  134 

55 

Greenwood  v.  Coleman 

44 

Bank    v. 

Griffin  v.  Prlngle 

39 

49 

Griffith  v.  Hughes 

151,  177 

64 

Grinnell  v.  Baker 

120 

arle            159 

Griswold  v.  Caldwell 

72 

154 

v.  Sackett 

8 

igent           181 

Groton  v.  Ruggles 

14 

70 

Guarantee  Trust  Fund 

Co.  v. 

143 

Scott 

-  9 

45 

Guernsey  v.  Lazear 

164 

[to.          70,  71 

Guion  v.  Pickett 

8 

177 

Gulick  v.  Gullck 

9,  190 

161,  167 

Gunn  v.  Brown 

174 

121,  176 

Gunter  v.  Janes 

147,  156 

H. 

34,  119 

Hadden  v.  Spader 

161 

g  Invest- 

Hadlock  r.  Brooks 

77 

69 

Hagan  v.  Platt 

122 

119 

Hahn  r.  Hutchinson 

166 

165 

Halnes  v.  Elliot 

24 

55,  61,  64 

Hall,  In  re 

112 

81 

v.  Cushing 

14 

95,  99 

v.  Ditto 

180 

83 

Hallett's  Estate 

181 

124 

Hallows  t7.  Lloyd 

2,  99 

128,  129 

Halsey  17.  Tate 

178 

129,  130 

Halstead,  In  re 

104 

128 

Hamilton  v.  Faber 

22 

38 

Hamlin  r.  Hamlin 

160 

28,  146 

Hammond  r.  Hammond 

184 

57 

Hampton  17.  Foster    28, 

29,  30,  78 

60 

Hanna  v.  Clark 

36,  39 

e                    62 

Harlow  v.  Cowdrey 

52 

XXV111 


TABLE  OP   CASES 


PAGE 

PAGE 

Harrington  v.  Brown                   33 

Houghton  v.  Davenport      48,  180 

Harris  v.  Elliott                             50 

Howard  v.  Fay                             181 

v.  First  Nat'l  Bank              43 

v.  Gilbert                               22 

v.  Harris                              173 

Housman,  In  re          126,  140,  141 

v.  Starkey                     94,  143 

Hovey  v.  Dary                             108 

Harrison  v.  Pepper            140,  141 

How  v.  Waldron                         145 

Hart  v.  Kapu                                   40 

Howe  v.  Lord  Dartmouth         106, 

Harte  v.  Tribe                               82 

107,  123 

Hartman's  Appeal                       158 

v.  Ray                                       4 

Harvard  College  v.  Amory       106, 

Howland  v.  Green                 98,  142 

113,  114,  116 

Hoyt,  In  re                                    136 

v.  Weld                                   66 

v.  Latham                       32,  178 

Haskin,  In  re                                38 

Hubbard  v.  Fisher                         43 

Hassard  v.  Rowe                        108 

Hubbell  v.  Medbury                     178 

Hauk  v.  Van  Ingen                     181 

Hughes  v.  Chicago  Co.                  24 

Hawley  v.  James                  57,  169 

Humphrey  v.  Campbell              162 

r.  Ross                                        158 

Hun  v.  Cary                                  152 

Haxall's  Adm'rs  v.  Shippen      141 

Hunt,  Appellant                           114 

Haydel  v.  Hurck                           61 

v.  Gontrum                   115,  118 

Hayes  v.  Hall             32,  33,  87,  91 

v.  Perry                         29,  193 

Hazard  v.  Coyle                             36 

v.  Watkins                           125 

Heard  v.  Eldredge               123,  142 

Huntington  v.  Jones          166,  168 

Heath  v.  Bishop                           165 

Hurlburt,  In  re                             184 

Heighe  v.  Littig                           124 

Hussey  v.  Arnold                     28,  77 

Hemenway  v.  Hemenway  97,  122, 

Hutchinson  v.  Maxwell              165 

128,  130,  131,  136 

Hutchison's  Appeal                    174 

Hemphill's  Appeal                        120 

Henderson's  Estate                      173 

Hepburn  v.  Hepburn                  138 

I. 

Herron  v.  Marshall                      27 
Hext  v.  Porcher                            99 
Hibbard  v.  Lamb                           55 
Hicks,  In  re                                  181 
Hildenbrandt  v.  Wolff                139 
Hilliard  v.  Fulford                      144 

Insurance  Co.  v.  Chase              102 
Iowa  &  California  Land  Co. 
v.  Hoag                             188,  189 
Ireland  v.  Ireland                         62 
Irvine  v.  Dunham                          23 

Hills  v.  Barnard                             98 
v.  Putnam                  80,  84,  96 
Hinson  v.  Williamson                 149 

v,  Irvine                                   15 
Isherwood  v.  Oldknow 
Iverson  v.  Saulsbury                  178 

Kite's     Devisees     v.     Kite's 

Ex'ors    122,  128,  132,  133,  134, 

J. 

135,  136,  140,  141 

Hobbs  v.  Smith                             165 

Jackman  v.  Nelson                       82 

Hodges,  In  re                          62,  63 

Jackson  v.  Von  Zedlltz      85,  164, 

v.  Bullock                              182 

167 

Hoke  v.  Hoke                                  43 

Jackson  Square  Loan  &  Sav- 

Holbrook v.  Holbrook        133,  134 

ings  Ass'n  v.  Bartlett             164 

Holland  Trust  Co.  v.  Suther- 

Janes v.  Walker                            78 

land                                             96 

Jencks  v.  Alexander                      17 

Holmes,  In  re                              181 

Jenkins  v.  Lester      168,  188,  189, 

v.  Bring                                115 

190 

v.  Taber                                139 

v.  Whyte                         37,  94 

Holt  v.  Hogan                                 64 

Jennison  v.  Hapgood    39,  110,  154 

Honaker  Sons  v.  Duff                 165 

Jewett,  Ex  parte                108,  109 

Hopgood  v.  Parkin                       90 

v.  Schmidt                               14 

Hopkins  v.  Burr                           180 

Johns  v.  Johns              68,  107,  109 

Hopkinson  v.  Burghley                 91 

Johnson,  In  re                        31,  78 

Ilorton  v.  Brocklehurst             149 

v.  Brldgewater  Mfg.  Co.    135 

TABLE  OF  CASES 


XXIX 


PAGE 

Johnson  v.  Lawrence  38 

Jobnstone  v.  Jobnstone  67 

Jones'  Appeal  88,  89 

Jones'  Estate  178 

Jones  v.  Atchison,  Topeka  & 

Santa  Fe"  Railroad       65 

v.  Dougherty  170 

v.  Foote  82 

v.  Home  Savings  Bank     145, 

178 

v.  Jones    186,  187,  188,  190, 
191 

v.  Lewis  104,  148 

v.  McPhllllps  24 

Jordan  v.  Jordan        139,  141,  142 

Jourolman  v.  Massenglll  164 

Judson  v.  Corcoran  161 


Kane  v.  Kane's  Adm'r  154 

Kaufman  v.  Crawford  109 

Keane  v.  Robarts  71 

Keeler  v.  Lauer  60,  159 

Keeney  v.  Morse        186,  187,  188 

Keith  v.  Copeland  172 

Kemble's  Estate  48,  134 

Kemp  v.  Foster  41 

Kendall  v.  DeForest      94,  95,  144 

Kennard  v.  Bernard  55 

Key  v.  Hughes  121 

Keyes  v.  Carleton  82 

Kllbee  v.  Sneyd        6,  89,  103,  151 

Klldare  v.  Eustace  168,  189 

Klmball  v.  Blanchard  62 

v.  Reding  115 

King  v.  Bellord  16 

v.  Boys  15 

v.  Cushman  34 

v.  Mildmay  51 

v.  Mullins  91 

v.  Parker  44 

v.  Talbot     112,  113,  114,  116 

KInmonth  v.  Brigham      106   111, 

122 

Knefler  v.  Shreve  165 

Knight  v.  Boston  112 

Knox  v.  Jenks  69 

Krebs'  Estate  174 

Kyle  v.  Barnett  33 


Ladd  v.  Ladd  13 

Lafferty's  Estate  16 

Lamberton  v.  Youmans  177 


PAGE 

Lamport  v.  Haydel  164 

Lamson  v.  Knowles  143 

Landis  v.  Scott  91 

Lang  v.  Lang's  Ex'ors         133, 135 
Lang's  Ex'ors  v.  Lang  133 

Langton  v.  Brackenbury  81 

Lanius  v.  Fletcher  187 

Law's  Estate  120 

Lawrence's  Estate  187 

Lawrence  v.  Lawrence  82 

Laws  v.  Williams  187 

Lawton  v.  Law  ton  112 

Learned  v.  Welton  45 

Lebanon  Bank's  Estate  181 

Lee  v.  Brown  83 

v.  Hewlett  162 

v.  Sankey  56 

Leeds,  Ex'or,  v.  Wakefield          59 
Leggett  v.  Hunter  67 

Leigh  v.  Harrison  164 

Leland  v.  Hayden  130 

v.  Smith  188 

Lemen  v.  McComas  175 

Lent  v.  Howard  173 

Lenz  v.  Prescott  144,  163 

Leonard  v.  Owen  125 

v.  Pierce  92 

Lerow  v.  Wilmarth  141 

Lessee  of  Ward  v.  Barrows        64 
Lever  v.  Russell  94 

Lev!  v.  Gardner  159 

Levy's  Trusts,  In  re  167 

Lewis  v.  Davis  125 

v.  Nobbs  103,  105 

Llbby  v.  Todd  08 

Life  Ass'n  of  Scotland  v.  Sid- 

dal  96,  170 

Lincoln  v.  Aldrich  97 

v.  Morrison  180 

v.  Perry  186,  187 

Lindlngton  v.  Patton  85 

Lindsay  v.  Harrison  165 

v.  Kirk  38 

Lingke  v.  Wilkinson  33 

Linton  v.  Shaw  190,  191 

Little  v.  Chadwick  180,  181 

v.  Little  35,  138.  160 

Livingston  v.  Livingston  17 

Lloyd  v.  Banks  162 

Londesborough  v.  Somerville    135 
Long  Island  Loan  &  Trust  Co., 

In  re  33 

Lord  v.  Brooks  131,  133 

Lor  ing  v.  Brodle  72,  17S) 

v.  Loring  84 

v.  Salisbury  Mills         12,  99. 
102,  182,  184 


XXX 


TABLE   OP   CASES 


PAOK 

Loring  v.  Steinemann  94, 143 

v.  Thompson  172 

Lovett  v.  Farnham  63,  80 

Low  v.  Bouverie          76,  100,  146, 

171 

Lowe  v.  Convocation  of  Prot. 

Episc.  Church       97,  118 
v.  Jones  181 

Lowrle's  Appeal  34 

Lowry   v.    Farmers'   Loan   & 

Trust  Co.  98,  126,  133 

Lyman  v.  Pratt  128,  130 


M. 

Mackey's  Adm'r  v.  Coates          76 

Maclaren  v.  Stainton         123,  137 

Magnus  v.  Queensland  Bank     56, 

182 

Major  v.  Herndon  125 

Mallon's  Estate  89,  150 

Mandlebaum  v.  McDonnell  168 
Manderson's  Appeal  48 

Mannix  v.  Purcell  77 

Mannhardt  v.  Illinois  Staats- 

Zeltung  Co.  55,  61 

Mansfield  v.  Wardlow  72 

Mant  v.  Lelth  177 

March  v.  Berrler       .  108 

v.  Roman  22 

Marquette  Fire  Commission- 
ers v.  Wilkinson  181 
Marsh  v.  Read  74 
Marshall  v.  Caldwell      56,  60,  106 

v.  Kraak  50 

v.  Marshall  147,  181 

Marx  v.  Cllsby  171 

Mason  v.  Jones  62 

v.  Pomeroy    31,  48,  77,  78,  79 
Massachusetts   General   Hos- 
pital v.  Amory  8 
Massey  v.  Stout                           117 
Massle  v.  Watts         98,  168,  187, 
188,  189 

Matthews  v.  Brlce  104,  105 

Mattocks  v.  Moulton        113,  115, 

118 

May  v.  May  37,  41,  80,  ,81 

Mayer  v.  Galluchat  34 

Mayo  v.  Moritz  31,  48,  77 

McCallum's  Estate  36 

McCaun  v.  Randall  10,  169,  190 
McCartln  v.  Traphagen  147,  151 
McClanahan  v.  Henderson  87 
McCloskey  v.  Gleason  121 

McCoy  v.  Poor  180 


PAOB 

McDonald  v.  Irvine          103,  107 
v.  Kneeland  162 

Mclntlre  v.  Llnehan  13 

Mclntlre's  Adm'rs  v.   Zanes- 

vllle  112 

Mclntyre,  In  re  148 

McKeen's  Appeal  135 

McKlm  v.  Blake  154 

v.  Doane  19 

v.  Hibbard          110,  154,  155 
McKnight  v.  Walsh  81,  84 

McLenegan  v.  Yelser  70 

McLeod  v.  Evans  181 

McLouth  v.  Hunt  133 

McNeillle  v.  Acton  112 

McPherson  v.  Cox  23,  24 

McQueen  v.  Farquhar  73 

Meeker  v.  Crawford  36,  38 

Meeks  v.  Olpherts  27 

Me"gret,  In  re  186 

Meldon  v.  Devlin  47,  123 

Meldrlm  v.  Trustees  of  Trinity 

Church  135 

Memphis    Savings    Bank    v. 

Houchens  188,  189 

Mendes  v.  Guedalla    56,  104,  105, 
182 
Mercantile  Trust  Co.   v.   St. 

Louis,  etc.  Railroad  Co.         181 
Mercer  v.  Buchanan          130,  186 
v.  Safe  Deposit  &  Trust 

Co.  55 

Mercler  v.  West  Kansas  Land 

Co.  69 

Merrlam  v.  Hassam  180 

Merrill  v.  Preston  186 

Merritt  v.  Cortles  62,  186 

Merry  v.  Pownall  36,  49 

Meyers  v.  Bennett  49 

Milbank  v.  Crane  9,  20 

Millen  v.  Guerrard  128 

Miller,  Matter  of  21 

v.  Redwlne  72 

v.  Zufall  183 

Mills  v.  Britton  128 

v.  Mills  126 

Milner  v.  Proctor  60 

Minot  v.  Paine  128,  129 

v.  Prescott  58 

v.  Purrington  94,  143 

v.  Tappan  126 

v.  Thompson  106 

Mitchell  v.  Carrolton  Bank        69 

v.  Whitlock  78,  146 

v.  Winslow  98 

Moll  v.  Gardner  64 

Molton  v.  Henderson  27,  180 


TABLE  OP   CASES 


XXXI 


PAGE 

Monday  v.  Vance  164 

Monell  v.  Monell  103,  149 

Montefiore  v.  Guedalla  18 

Moore's  Estate  174 

Moore  v .  Eure  120 

v.  Sinnott  175 

More  v.  Calkins  38 

Morgan     v.     Kansas    Pacific 

Railroad  26,  169 

v.  Moore  19,  50,  145 

Morrlll  v.  Merrill  92 

Morrison  v.  Lincoln  Sayings 

Bank  181 

Morse  v.  Hill        32,  94,  155,  159, 

171,  177,  178 

Mortimer  v.  Ireland  20,  52 

Mortlock  v.  Buller  70 

Morton's  Estate  96 

Morville  v.  Fowle  45,  55,  88 

Mount  v.  Tuttle  186 

Mudge  v.  Parker  122 

Mulford  v.  Mulford  112 

Muller  v.  Dows  189 

Mulrein  v.  Smillie        77,  78,  146 
Munroe  v.  Holmes  92 

Murphy  v.  Union  Trust  Co.          68 
Murray  v.  Feinour  110,  111 

Muscogee  Co.  v.  Hyer  40 

Myer's  Estate  23 


N. 

Nance  v.  Nance  120 

Nash  v.  Coates  44 

National   Bank  v.   Insurance 

Co.  49,  181 

National   Exchange   Bank  v. 

Sutton  62 

National  Valley  Bank  v.  Han- 
cock 84 
Neel's  Estate  122,  124 
Nelson  v.  Duncombe  75,  83 
Nettlefold,  In  re  61 
New  v.  NIcoll  77 
Newcomb  v.  Keteltas  74 
New  England  Trust  Co.  v. 

Eaton  98,  107,  111,  124, 126, 139 
Newhall  v.  Wheeler  183 

New   York   Life   Ins.    Co.   v. 

Sands  139 

New  York  Life  Ins.  &  Trust 

Co.  v.  Baker  136 

New  York,  New  Haven  & 
Hartford  R.  R.  Co.  v.  Schuy- 
ler  161 

Neyland  v.  Bendy  87.  175 


Nichols,  Appellant  86,  177 

v.  Eaton  165,  167 

Nice's  Appeal  133 

Nickels  v.  Philips  24 

Nickerson  v.  Cockhlll  59 

v.  Van  Horn        164,  165,  166 
Nobles  v.  Hogg  120 

Norcum  v.  D'Oench  56 

Norling  v.  Allee  184 

Norris  v.  Clymer  66,  67 

Norris  v.  Hall  46 

North     Adams     Universallst 

Society  v.  Fitch  7 

North  American  Coal  Co.  v. 

Dyett  77,  78 

Northern  Dakota  Elevator  Co. 

v.  Clark  181 

Northington,  In  re  106 

Norton  v.  Norton  44 

v.  Phelps  48,  49 

Nugent  v.  Cloon  54 

Nyce's  Estate  115 


O. 

Ochiltree  v.  Wright  56 

Odd   Fellows'   Hall  Ass'n  v. 

McAllister  30,  78 

Oeslager  v.  Fisher  108 

Old  South  Society  v.  Crocker     68 
Oliver  v.  Court  70,  149 

Olney  v.  Balch  15 

Olson  v.  Lamb  42 

O'Malley  v.  Gerth  30 

Onslow  v.  Wallis  15 

Ord  v.  Noel  69,  70 

Ormiston  v.  Olcott    115,  116,  193 
Osborne  v.  Gordon  62 

Ouseley  v.  Anstruther  110 

Overman's  Appeal  164 

Ovey  v.  Ovey  111 

Owens  v.  Walker  81 

Owings  v.  Rhodes  60 


P. 

Pace  v.  Pace  165 

v.  Pierce  44,  45 

Pacific  Nat'l  Bank  v.  Wind- 
ram  163,  164 

Packard  v.  Klngman  77,  78,  146 

v.  Marshall  50 
v.  Old  Colony  Railroad        44 

Paddock  v.  Palmer  24 

Paget  v.  Stevens  190 


XXX11 


TABLE   OP   CASES 


PAOB 

Palmer  v.  Whitney  144,  163 

Parcher  v.  Russell  94 

Paris  v.  Paris  126 

Parker  v.  Ames  38,  39 

v.  Boston    Safe    Deposit 

&  Trust  Co.  95,  116 

v.  Converse  19 

v.  Johnson  124 

v.  Moore  17 

v.  Seeley  145 

Parmenter  v.  Barstow  31 

Parr,  In  re  138 

Parsons  v.  Wlnslow   123, 137, 138, 

139 

Paschal  v.  Acklln  186,  187 

Pass  v.  Dundas  151 

Pearson  v.  Haydel  180 

v.  Jamison  57 

Peck  v.  Sherwood  140 

Peckham  v.  Newton  97,  120 

Pell  v.  DeWinton  71 

Penn  v.  Brewer  9,  190 

v.  Folger  14 

Penneld  v.  Tower  187 

Pennell  v.  Deffell  180 

Pennington    v.    Metropolitan 

Museum  109 

v.  Smith  188,  190 

People  v.  Townsend  31,  184 

Perkins'  Appeal  34 

Perkins  v.  Moore  14 

Perrine  v.  Newell  35,  36 

v.  Vreeland  153 

Perrins  v.  Bellamy  151,  153 

Person  v.  Warren  16 

Peters  v.  Bain  181 

Philbin  v.  Thurn  6,  14 

Philbrick's  Settlement,  In  re      15 
Philippi  v.  Philippe  178 

Philips  v.  Philips  161 

Pierce  v.  Boroughs  134,  140 

v.  Prescott  143,  152 

Piety  v.  Stace  33 

Pink  v.  De  Thuisey  61 

Pinkard's  Distributees  v.  Pink- 

ard's  Adm'r  39 

Pitney,  In  re  140 

v.  Everson  37 

Plympton  v.  Boston  Dispen- 
sary 137,  139,  140 
Poindexter  v.  Blackburn  125 

v.  Buswell  77 

Polk  v.  Linthicum  23 

Pool  v.  Harrison  157 

Pooley,  In  re  36 

Pope  v.  Devereux  76 

v.  Farns worth  176 


Porter  v.  Bank  of  Rutland  17 

v.  Woodruff  115 

Portsmouth  v.  Shackford  61 

Pothonier,  In  re  105 

Potter  v.  Couch  167 

v.  Hodgman  72 

Powcey  v.  Bowen  75 

Pratt  v.  Pratt  132 

Premier  Steel  Co.  v.  Yandes  41 

Prendegast  v.  Prendegast      60,  63 

Presley  v.  Stribling  45 

Prevost  v.  Gratz  178 

Price,  In  re  186 

v.  Burroughs  133 

v.  Krasnoff  26 

Prinz  v.  Lucas  30,  31 

Pritchett  v.  Nashville  Trust 

Co.                            128,  131,  134 

Proctor  v.  Clark                186,  187 

v.  Heyer  61 

Purdie  v.  Whitney  66 

Pusey  v.  Clemson  43 

Pyle  v.  Henderson  26 


Q. 

Quackenboss  v.  Southwick          23 
Quin's  Estate  160 

Quinn  v.  Safe  Deposit  &  Trust 

Co.  133 

Quirk  v.  Liebert  33,  177 


Raby  v.  Ridehalgh  151,  177 
Raikes,  Doe  d.,  v.  Anderson  48 
Rand  v.  Hubbell  130 
Randolph  r.  East  Birming- 
ham Land  Co.  117 
Ray  v.  Doughty  55 
Read  v.  Patterson  59 
Reade  v.  Continental  Trust 

Co.  63,  80 

Rector  v.  Dalby  174 

Reed  v.  Head  126 

v.  Whitney  160 

Reese  v.  Meetze  38 

Reeves  v.  Pierce  180 

Reid  v.  Mullins  87 

Reybould,  In  re  30,  31 

Rhoads  v.  Rhoads  174 

Rhode  Island  Hospital  Trust 

Co.  v.  Waterman  37,  141 

Richardson  v.  Boston  29 

v,  Richardson  128 


TABLE   OP   CASES 


XXX111 


PAOB 

Riddle  v.  Whltehlll  178 

Rldgley  v.  Johnson  56 

Robb  v.  Washington  &  Jeffer- 
son College  186,  187 
Roberts  v.  Hale               72,  77,  78 
v.  Stevens  164 
Robertson  v.  Collier  125 
v.  De  Brulatour    18,  126,  133 
v.  Johnston                          165 
Robinson  v.  Bonaparte              126 
v.  Robinson          109,  112,  152 
v.  Wheelwright                    164 
Rockwood  v.  School  District    181 
Rogers  v.  Chase  47 
v.  Dill                                    109 
v.  Rogers  7 
Rome     Exchange     Bank     v. 

Eames  165 

Roosevelt  v.  Van  Allen  38 

Rowe,  In  re  33 

Roxburghe  v.  Cox  162 

Royce  v.  Adams  7 

Rua  v.  Watson  47 

Ruggles  v.  Tyson  58,  64,  68 

Russell  v.  Grlnnell  175 

Rutland  Trust  Co.  v.  Sheldon   57, 
61,  97 

Ryan  v.  Porter  67 

Ryder  v.  Bicker  ton  117 


S. 

Saint    Paul     Trust    Co.     v. 

Strong  33,  154 

Salmon,  In  re  99,  116,  156 

Samuel  v.  Samuel  167 

Sanders  v.  Houston  Guano 

Co.  48 

Sargent  v.  Sargent  15 

Satterthwalte's  Estate  15 

Saunders  v.  Haughton  125 

v.  Vautler  174 

Sawyer  v.  Cook  178 

Schaffer  v.  Wadsworth  112,  176 
Schenck  v.  Barnes  165 

v.  Schenck  51 

Schley  v.  Brown  68 

Schluter  v.  Bowery  Savings 

Bank  16 

School  District  v.  First  Bank  49 
Schouler,  Petitioner  54 

Schwab  v.  Cleveland  30 

Schwartz  v.  Gerhardt  188,  191 
Scott  v.  Rand  22,  23 

«.  Ray  87 


PAOK 
Scottish-American    Mortgage 

Co.  v.  Clowney  33 

Sculthorp  v.  Tupper  106 

Seamans  v.  Glbbs  174 

Sears  v.  Choate  174 

Seattle  v.  McDonald  6,  14 

Second    Universalist    Church 

v.  Colgrove  129,  130,  131 

Seger    v.    Farmers'    Loan    & 

Trust  Co.  162 

Seidelbach  v.  Knaggs  45 

Sellew's  Appeal  61 

Sells  v.  Delgado  55 

Sergison,  Ex  parte  16 

Sewall  v.  Wilmer       186,  187,  190 

Seymour  v.  McAvoy  167 

Shaw  v.  Cordis  136 

v.  Humphrey  13 

v.  Paine  9,  22 

v.  Spencer  47,  183 

Sheets'  Estate  (52  Pa.  St.  257)    14 

(215  Pa.  St.  164)         4,  6,  14 

Sheffield  v.  Parker  100 

Shepard  v.  Creamer  30 

Shepherd  v.  Hammond  43 

Sherman  v.  Parish  151 

v.  Skuse  167 

v.  White  118 

Sherrlll  v.  Shuford  42 

Shirley  v.  Shattuck  41 

v.  Shirley  17 

Shoe  &  Leather  Nat'l  Bank  v. 

Dix  28,  77,  78 

Sholty  v.  Sholty  118 

Shook  v.  Shook  46,  51 

Shower's  Estate  174 

Shuey  v.  Latta  118 

Shumway  v.  Cooper  108 

Slmonds  v.  Simonds  160 

Sinclair  v.  Jackson  45,  73 

Singleton  v.  Lowndes  120 

Slse  v.  Wlllard  175 

Skelding  v.  Dean  178 

Skinner  v.  Taft  122 

Slade  v.  Van  Vechten  34 

Slaney  v.  Watney  5 

Slater  v.  Oriental  Mills  180 

Slauter  v.  Favorite  115,  118 

Slevln  v.  Brown  44 

Sloan's  Estate  171 

Slocum  v.  Slocum  64 

Smith's  Estate  132,  133 

Smith,  In  re  55,  106 

v.  Ayer  78 

v.  Barnes  171 

v.  Burgess  47 

v.  Calloway  9,  190 


XXXIV 


TABLE  OP  CASES 


Smith  v.  Dana 
v.  Davis 
v.  Hooper 
v.  Keteltas 
v.  Knowles 
v.  Lansing 
v.  Miller 
v.  Nones 
v.  Perry 
v.  Proctor 
i?.  Smith 
v.  Towers 

Smyth  v.  Burns 


PAGE 

128, 129, 131 

188,  191 

125 

138 

7 

38 

33 

142 

50,  185 

44 

174 

164 

119 


Snowhill  v.  Snowhill          108,  109 
Snyder    v.    Safe    Deposit    & 

Trust  Co.  55 

v.  Snyder  9,  190 

Sohier  v.  Eldredge  97,  138  j 

Southern     Railway     Co.     v. 

Glenn's  Ex'or  39 

Spangler's  Estate  141 

Sparhawk  v.  Buell  144 

v.  Sparhawk  23 

Speidel  v.  Henrici  178 

Speight  v.  Gaunt  59,  90 

Spencer  v.  Spencer  38 

Sprague,  In  re  69 

Sproule  v.  Bouch  128 

Staats  v.  Storm  45,  46 

Stanley  v.  Colt  67 

v.  Stanley  164 

Starkweather  v.  Jernillo  32 

State  v.  Guilford  89 

v.  Platt  36 

Stearns  v.  Praleigh  21 

v.  Palmer  183 

Steib  v.  Whitehead  164 

Steinway's  Estate  181 

Steinway  v.  Steinway  35 

Stenfelds  v.  Watson  183 

Stephenson  v.  Morris     61,  62,  82, 

98 

Sterling  v.  Sterling  87 

Stetson  v.  Bass  94 

Stevens,  In  re  124,  125,  136 

v.  Austen  52 

v.  Palmer  163 

Stewart  v.  Conrad's  Adm'r      178 

v.  Phelps  133 

Stockdale  v.  South  Sea  Co.      182 

Stone,  Ex  parte  19 

v.  Clay  112 

v.  Farnham  39 

v.  Godfrey  87 

v.  Kahle  66 

v.  Littlefleld  140 

Story  v.  Gape  146 


PAGI 

Stott  v.  Lord  55,  56,  76 

v.  Milne  153 

Stowe  v.  Bowen  149 

Strickland  v.  Symons  48 

Sturges,  In  re  1 

Sugden  v.  Ashley  128 

v.  Crossland  35 

Sullivan  v.  Babcock  187 

Swale  v.  Swale  55 

Swartwout  v.  Burr  15 


T. 

Tabor  v.  Brooks  61 

Taft  v.  Smith  115 

Talbot  v.  Leatherbury  51 

Tallant  v.  Stedman  155 

Taylor  v.  Buttrick  82,  85 

v.  Davis    28,  77,  78,  145,  146 

v.  Hite  119 

Teague  v.  Corbett  35 

Tebbs  v.  Carpenter  148 

Tempest,  In  re  18 

Temple  v.  Ferguson  50,  145 

Ten  Broeck  v.  Fidelity  Co.          41 

Thayer  v.  Daniels  101,  162 

v.  Dewey  115 

v.  Kinsey  99,  156 

Thiebaud  v.  Dufour  186 

Third  Nat'l  Bank  v.  Lange      47, 

70,  71,  179 

Thomas  v.  Bowman  87 

v.  Gregg  132,  133 

v.  Higham  21 

Thompson  v.  Finch    147,  151,  155 

v.  Murphy  164 

v.  Remsen  169 

Thomson  v.  Peake  47 

Thome  v.  Foley  178 

Tillinghast  v.  Bradford  165 

v.  Coggeshall  160 

Todd,  In  re  38,  42 

Tolles  v.  Wood  167 

Toronto  General  Trust  Co.  v. 

C.  B.  &  Q.  R.  R.  188,  190 

Townend  v.  Townend  33 

Townley  v.  Sherburne  149 

Townsend  v.  Allen  186 

Treadwell  v.  Salisbury  Mfg. 

Co.  97 

v.  Treadwell  177 

Trenton  Trust  Co.  v.  Donnelly  123, 

140 

Trull  v.  Trull  115 

Tryon,  In  re  5 

Tucker  v.  State  118 


TABLE   OP   CASES 


XXXV 


PAOB 

Turnbull  v.  Pomeroy  34,  37 

Turner  v.  Maule  8 

Tuttle  v.  First  Nat'l  Bank   72,  179 

v.  Gilmore  116,  153 

v.  Robinson  42 

v.  Woolwortb  97 


.     U. 

Cllman  v.  Cameron  168,  174 

United  States  Nat'l  Bank  v. 

Weatherby  181 

United  States  Trust  Co.  v. 

Roche  26,  72 

Urann  v.  Coates  37 

Utica  Insurance  Co.  v.  Lynch  110 


V. 

Vanderbllt,  In  re  61 

Vandever's  Appeal  55,  76 

Van  Doren  v.  Olden          124,  131, 

132,  133 

Van  Vechten  v.  Terry  26 

Van  Vronker  v.  Eastman  124,  137 
Vaughton  v.  Noble  86 

Vetterlein  v.  Barnes  26 

Vlnton's  Appeal  132 

Vohmann  v.  Michel  160 

Vyse  v.  Foster  147 


W. 

Wade  v.  Lobdell  177 

Wadsworth,  Matter  of  55 

v.  Arnold  77,  78 

Wagnon  v.  Pease  11,  98 

Walker  v.  Beal  173 

r.  Brooks  49 

v.  Shore  60,  176 

Wallston  v.  Braswell  162 

Walton  v.  Follansbee  175 

v.  Ketchum  27 

Warburton  v.  Sandys  19 

Ward  v.  Barrows  64 

v.  Harvey  180 

v.  Kitchen  111 

Warnecke  v.  Lembca     ,  55 

Warren  v.  Ireland  48 

Waterman  v.  Alden  130 

v.  Baldwin  72 

v.  Spaulding  69 

Watts  v.  Howard        139,  140,  172 

Wayman  v.  Jones  182 


turn 

Weaver  v.  Fisher  91 

Webb  v.  Dietrich  23 

r.  Ledsam  56 

Webster  v.  Vandeventer        20,  54 

Webster  Bank  v.  Eldridge  12 

Wedderburn,  In  re  111 

Weeks  v.  Hobson  67,  109 

Weir  v.  Barker  73 

Welch  v.  Adams  190,  192 

v.  Allen  44 

v.  Polley  181 

Weld  v.  Weld  67,  68 

Wells,  Fargo  &  Co.  v.  Walsh        7 

Wemyss  v.  White  54 

Westcott  v.  Nickerson        122,  123 

Westerfleld,  In  re  150,  153 

Western  Railroad  Co.  v.  Nolan    45, 

158,  184 

Wetherell  v.  O'Brien  180 

Wetmore  v.  Porter  26,  179 

v.  Truslow  18 

Wheate  v.  Hall  65 

Wheeler  v.  Perry  14,  97 

White  v.  Albertson  45 

v.  Cuddon  70 

v.  Ditson  14,  148 

v.  Wiley  162 

Whiteley,  In  re  116 

Whitney  v.  Smith  35 

Whittier  v.  Child  77 

Wiess  v.  Goodhue  27 

Wiggin  v.  Swett  140 

Wilding  v.  Bolder  17 

Wiles  v.  Gresham  147,  153 

Wilkes  v.  Rogers  84 

Wilkin,  In  re  5 

Wllkins  v.  Hogg         149,  151,  153 
Williams  v.  Bradley  82 

v.  First  Presbyterian  So- 
ciety 180 
v.  Scott  32 
v.  Smith  81 
Williamson  v.  Berry            66,  109 
v.  Williamson                      172 
Willis  v.  Klymer                           93 
Wilson  v.  Braden                         189 
v.  Davisson  71 
v.  Wilson          23,  79,  80,  158 
Wiltbank's  Appeal              124,  134 
Winona  Co.  v.  Saint  Paul  Co.    15 
Winslow  v.  Young                       184 
Winthrop  v.  Attorney  General   88 
Wise  v.  Wise  3 
Woddrop  v.  Weed                          57 
Womack  v.  Austin              111,  116 
Wood  v.  Burnham                         88 
v.  Mather                          109 


XXXVI 


TABLE  OP  CASES 


PAOB 

Wood  v.  Travis  9 

v.  Wood  187 

Woodard  v.  Wright  36,  49 
Woodhouse  v.  Crandall 

Woods  v.  Sullivan  125 

Wootten  v.  Burch  125 

Wormeley  v.  Wormeley  47,  71 

Worrell's  Appeal  113 

Wright's  Trusts,  In  re  91 

Wych  v.  East  India  Co.  27 
Wylly  v.  Collins        30,  48,  77,  79 

Wyman  v.  Patterson  148 


Y. 

Yeakel  v.  Litchfleld  171 

Yerkes  v.  Richards 
Young  v.  Snow  174,  175 

v.  Young  (4  Cranch  C.  C. 

499)  19 

z. 

Zabriskie  v.  Wetmore  174 

Zimmerman  v.  Makepeace         169 


PART  I. 
THE  TRUSTEE  AS  AN  INDIVIDUAL. 

PRELIMINARY. 

THE  class  of  trusts  treated  in  this  handbook  are  those 
trusts  which  are  expressly  created  by  deed  or  will. 
The  maker  of  the  trust  can  make  any  provision  not 
contrary  to  public  policy  as  to  the  management  of  the 
trust  property  or  the  duties  and  liabilities  of  the  trustee; 
and  these  provisions,  clearly  expressed  in  the  trust  in- 
strument, will  supersede  the  general  provisions  of  law 
applicable  to  trustees  and  trust  estates. 

It  is,  therefore,  of  primary  importance  for  the  trustee 
to  make  himself  thoroughly  familiar  with  the  trust 
instrument,  and  to  follow  its  directions  carefully  and 
accurately.  It  is  only  in  those  cases  where  the  trust 
instrument  does  not  make  special  provisions,  or  where 
those  provisions  are  contrary  to  public  policy,  that  he 
must  be  guided  by  the  general  law.  Probably  no  set- 
tlement was  ever  drawn  expressly  covering  all  a  trustee's 
duties,  powers,  and  liabilities,  hence  the  necessity  of  a 
knowledge  of  the  general  laws  governing  trust  estates; 

BUT  THE  FIRST  AND  MOST  IMPORTANT  D.UTY  OF  THE  TRUS- 
TEE IS  TO  STUDY  AND  BECOME  THOROUGHLY  FAMILIAR  WITH 
THE  PROVISIONS  OF  THE  TRUST  INSTRUMENT,  AND  THERE- 
AFTER TO  FOLLOW  THEM  OUT  IMPLICITLY. 

1 


2  TRUSTEESHIP  OFTEN   A   BURDEN 

I.  Office  not  always  desirable. — Trusteeship  is  not 
mere  contract  to  manage  property  for  another,  but  it  is  a 
relationship,  involving  many  duties  and  liabilities. 

It  is  not  always  desirable  to  be  a  trustee,  and  before 
undertaking  any  trust  the  individual  should  make  a  care- 
ful examination  of  the  trust  instrument  to  ascertain  its 
particular  provisions  and  what  his  duties  and  liabilities 
will  be.1  He  should  also  examine  the  property  to  see 
that  his  personal  interests  will  not  conflict  with  his 
duties  as  trustee. 

The  duties  of  a  trustee  to  his  beneficiary  require  not 
only  the  highest  good  faith  in  their  execution,  but  also 
the  absence  of  conflicting  personal  interests,  and  often 
the  sacrifice  of  personal  convenience  and  chance  of  profit.2 

An  individual  may  be  willing  to  trust  the  whole  or 
some  part  of  the  management  of  his  personal  affairs  to 
others;  but  a  trustee  must  manage  the  trust  affairs  him- 
self.8 The  individual  might  have  important  employment 
as  broker  or  counsel  for  the  trust  estate,  but  if  he  is  the 
trustee  such  services  will  be  unpaid  in  some  jurisdictions, 
or  at  least  looked  on  with  suspicion,  or  he  might  buy 
from  the  estate  or  sell  property  to  it,  but  as  trustee  he 
is  deprived  of  these  privileges.  Moreover,  he  is  put  in 
such  confidential  relationship  to  his  beneficiary  that  any 
profitable  business  dealings  which  he  has  with  the  bene- 
ficiary are  subject  to  suspicion,  even  where  the  trust 
property  is  not  in  question.4 

In  addition  to  the  complications  that  may  arise  from 
the  relationship  to  the  beneficiary,  the  trustee  assumes  all 
the  liabilities  involved  in  the  ownership  of  property,  and 
for  neglect  or  errors  in  judgment  in  its  management.6 
He  may  be  required  to  give  bonds  with  sureties  for  the 
faithful  performance  of  his  duties.6 

To  counterbalance  these  possible  disadvantages  the 

1  Kekewich,  J.,  in  Hallows  v.  Lloyd,  39  Ch.  D.  691.    Infra,  p.  98. 

2  Infra,  pp.  85,  87.  8  Infra,  pp.  85,  88. 
4  Infra,  p.  85.            5  Infra,  pp.  29,  151.          «  Infra,  p.  12. 


DISCLAIMER  3 

trustee  is  entitled  in  America  to  compensation,  generally 
to  the  same  extent  as  an  agent  or  factor  who  manages  the 
affairs  of  others.1  He  is  absolutely  prohibited  from  tak- 
ing any  other  benefit  from  the  trust.2  He  is  not  ordina- 
rily protected  by  statutes  of  limitations,  and  with  some 
exceptions  remains  liable  for  his  mistakes  and  mis- 
deeds as  long  as  the  trust  lasts. 

II.  Disclaimer.  —  No  one  need  be  a  trustee  against  his 
will,  since  an  acceptance  of  the  office  is  necessary ; 8  and 
the  office  may  be  refused  or  disclaimed  at  any  time  be- 
fore acceptance,  even  though  the  trustee  were  nominated 
under  his  promise  of  acceptance.4 

It  is  true  that  a  trust  estate  may  vest  in  the  heir  or 
representatives  of  a  deceased  trustee  without  possibility 
of  disclaimer ; 5  but  in  such  case  the  heir  or  represent- 
ative takes  only  the  title  to  the  property,  and  a  limited 
trust  to  transfer  the  estate  to  the  new  trustee,  when 
appointed,  and  if  he  is  the  personal  representative  to 
settle  the  accounts  of  the  deceased  trustee. 

If  the  office  is  to  be  disclaimed,  it  must  be  disclaimed 
at  once  and  unequivocally,  as  otherwise  an  acceptance 
may  be  implied.6 

No  particular  form  of  disclaimer  is  necessary ;  but  it 
should  be  affirmative  and  decided.  Although  a  simple 
verbal  refusal  to  undertake  the  trust  is  sufficient,  such  a 
disclaimer  would  be  unwise  in  most  cases,  and  probably 
difficult  of  proof  after  a  considerable  period  had  elapsed. 

In  general  the  disclaimer  should  be  in  writing,  and  re- 
corded where  the  settlement  is  recorded ;  and  if  the  set- 
tlement is  not  recorded,  then  addressed  and  delivered  to 
whomsoever  has  the  custody  of  the  instrument;  that  per- 
son being  in  most  cases  one  of  the  beneficiaries. 

l  Infra,  p.  36.  a  Infra,  p.  32. 

8  Ga.  Code  (1895),  §  3190.  *  Evans  v.  John,  4  Beav.  35. 

«  Co.  Litt.  9  a.     Infra,  p.  51. 

6  Wise  v.  Wise,  2  Jon.  &  La.  403. 


4  DISCLAIMER 

If  the  trust  instrument  is  a  deed,  then  the  disclaimer 
should  be  by  deed,  but  not  in  the  form  of  a  reconvey- 
ance which  presupposes  an  acceptance  and  vesting  of  the 
estate ;  though  in  practice  it  would  not  probably  be  so 
construed.1 

If  the  trust  instrument  is  a  will,  a  disclaimer  filed  in 
the  Probate  Court  is  appropriate,  although  the  failure  to 
qualify  or  give  bond  in  court  is  usually  construed  as  a 
disclaimer  by  statute  ; 2  but  such  a  disclaimer  cannot  be 
set  up  by  a  person  other  than  one  for  whose  security  the 
bond  is  given  until  some  action  is  taken  by  the  court.8 

A  trust  must  be  disclaimed  wholly,  as  trusts  are  not 
divisible,4  and  if  an  executor  have  the  management  of 
real  estate  given  him,  or  the  other  administration  of 
property  in  which  he  acts  the  part  of  a  trustee  as  well  as 
executor,  he  cannot  separate  his  duties  and  accept  part 
and  disclaim  the  other.6  If,  however,  separate  trusts  are 
made  for  the  real  eptate  and  personal  property,  he  may 
disclaim  one  and  accept  the  other.6 

Where,  however,  a  person  is  appointed  executor  and 
trustee  under  the  same  will,  he  may  disclaim  either  office 
and  accept  the  other,  unless  there  appears  to  be  an  inten- 
tion on  the  part  of  the  testator  that  he  should  accept  both 
or  neither.7 

It  is  said  that  when  two  trusts  are  created  by  the  same 
instrument  both  must  be  disclaimed  or  accepted ; 8  but  the 

1  Lewin,  p.  207. 

*  Gen.  Stat.  Conn.  (Revision  of  1902),  §  248;  Rev.  Stat.  Me.  (1903), 
ch.  70,  §  3 ;  Rev.  Stat.  Mo.  (1899),  §  4586  ;  Bev.  Laws  Vt.  (1894),  §  2608. 
But  the  refusal  to  give  bond  is  treated  as  a  ground  for  removal,  not  aa 
a  disclaimer,  in  some  States.    Bates'  Annotated  Revised  Statutes  Ohio 
(1906),  §  5983  ;  Code  Va.  (1904),  §  3420 ;  Code  Ala.  (1896),  §  4155. 

8  Howe  v.  Ray,  110  Mass.  298. 

*  In  New  Jersey  trusts  are  divisible.    Underbill,  p.  420,  n. 

6  See  Shaw,  C.  J.,  in  Dorr  v.  Wainwright,  13  Pick.  328,  331 ;  In  re 
Sheets'  Estate,  215  Pa.  St.  164. 

6  Carruth  v.  Carrnth,  148  Mass.  431. 

7  Daggett  v.  White,  128  Mass.  398. 

8  Lewin,  p.  214,  §  12.     Perry,  §  264,  end. 


DISCLAIMER — ACCEPTANCE  5 

better  view  seems  to  be,  that  where  they  are  wholly  sepa- 
rate trusts,  not  interdependent,  and  no  intention  appears 
that  both  or  neither  shall  be  accepted,  one  may  be  ac- 
cepted and  the  other  disclaimed.1 

The  effect  of  a  disclaimer  is  to  vest  the  whole  estate  in 
the  trustees  who  accept,2  and  relates  back  to  the  time  of 
the  gift,  and  the  result  is  the  same  as  though  the  indi- 
vidual disclaiming  had  never  been  appointed.8  As  to  the 
legal  title  the  exact  effect  is  less  clear,  but  nevertheless 
it  is  held  to  be  devested  by  the  disclaimer.* 

If,  however,  the  trust  instrument  bestowed  a  special 
power  on  all  the  trustees  nominated,  the  disclaimer  of 
one  will  destroy  the  power,5  and  if  a  gift  or  legacy 
is  attached  to  the  office  it  will  be  lost  by  a  disclaimer;  9 
but  a  gift  which  is  -not  attached  to  the  office  or  con- 
ditional on  its  acceptance  will  not  be  affected  by  a  dis- 
claimer of  the  office. 

If  the  individual  were  not  consulted  about  the  appoint- 
ment, he  may  have  the  expense  of  consulting  counsel  and 
his  costs.7 

III.  Acceptance.  — An  acceptance  should  be  made 
formally  according  to  the  provisions  of  the  trust  instru- 
ment; 8  but  if  no  manner  is  therein  specified,  if  the  set- 
tlement be  by  deed,  then  by  joining  in  the  deed,  or  if 
the  trust  be  established  by  will,  then  by  qualifying  in  the 
Probate  Court,  and  by  statute  a  person  not  so  qualifying 

1  In  re  Canard's  Trusts,  48  L.  J.  (N.  S.)  192;  Can-nth  v.  Carruth 
148  Mass.  431. 

2  Generally  and  by  statute  in  Maryland.    Pub.  Gen.  Laws  (1904), 
Art.,  93,  §§  293,  294. 

8  Ellis  v.  Boston,  H.  &  E.  Railroad,  107  Mass.  1. 
*  Lewin,  p.  208. 

6  In  re  Wilkin,  90  App.  Div.  (N.  Y.)  324,  remedied  by  statute  in 
New  York,  1903,  p.  732,  c.  370,  Infra,  p.  55. 

6  Slaney  v.  Watney,  L.  R.  2  Eq.  418. 

7  In  re  Tryon,  7  Beav.  496. 

8  Ga.  Code  (1895),  §  3190. 


6  ACCEPTANCE 

is  held  to  have  disclaimed,  and  a  new  trustee  may  be 
appointed.1 

If  an  individual  be  named  both  executor  and  trustee, 
he  will  be  construed  to  accept  both  offices  if  he  presents 
the  will  for  probate  without  disclaiming  either.2 

In  absence  of  statute  the  executor  or  administrator 
accepts  the  decedent's  trusts,  and  cannot  disclaim  them; 
but  by  statute  the  law  is  usually  the  reverse. 

It  is  not  unusual  for  a  will  to  provide  that  the  execu- 
tors shall  manage  certain  estates,  and  hold  them  in  trust 
for  certain  purposes.  In  such  cases  the  executors  act  as 
and  really  are  trustees  to  that  extent,  and  not  executors, 
and  should  be  qualified  as  trustees  as  well  as  execu- 
tors, although  in  practice  they  often  qualify  as  executors 
only.  8  In  some  jurisdictions  the  sureties  on  the  execu- 
tor's bond  will  not  be  liable  for  his  acts  as  trustee,  but 
in  other  States  they  will.4 

An  acceptance  will  be  implied  if  the  individual  inter- 
meddles with  the  trust  property,  or  performs  any  act 
to  carry  out  the  trust.5  Hence,  if  a  disclaimer  is  con- 
templated, care  should  be  taken  to  avoid  any  assumption 
of  authority,  or  voluntary  interference  with  the  trust  es- 
tate, either  as  volunteer  or  agent,  until  the  disclaimer  has 
formally  been  made;  since  such  assumption  or  interfer- 
ence will  readily  be  construed  as  an  acceptance.  And 
a  trustee  who  has  acted  as  such  cannot  disclaim,  even 
though  the  deed  needed  his  signature  and  he  has  not 

1  Supra,  p.  4. 

2  Flint,  §  157.     Supra,  p.  4. 

8  In  re  Sheets'  Estate,  215  Pa.  St.  164,  holds  that  the  office  is  really 
that  of  an  executor,  the  distribution  being  delayed,  and  so  charged  the 
surety  on  the  bond  of  the  administrator  d.  b.  n.  c.  t.  a.  This  doc- 
trine is  unsupported  by  authority  elsewhere.  Infra,  p.  14.  Bentley 
v.  Dixon,  60  N.  J.  Eq.  353 ;  Angus  v.  Noble,  73  Conn.  56 ;  City  of  Se- 
attle v.  McDonald,  26  Wash.  98 ;  Philbin  v.  Thurn,  103  Md.  342. 

«  Infra,  p.  14. 

6  Kilbee  v.  Sneyd,  2  Molloy,  186. 


ACCEPTANCE — APPOINTMENT  7 

signed.1  He  may,  however,  prove  that  the  act  from 
which  an  acceptance  would  be  implied  was  done  as  agent, 
or  was  merely  to  protect  the  property  until  a  trustee 
could  be  .appointed,2  or  that  he  acted  in  some  other 
capacity  than  that  of  trustee,  and  in  that  case  disclaim ; 
but  the  burden  of  proving  it  will  be  on  Mm. 

The  estate  vests  in  a  transferee  subject  to  dis- 
claimer,8 therefore  if  an  appointment  be  known  of  and 
not  disclaimed  within  a  reasonable  time,  an  accept- 
ance will  be  implied ;  and  the  burden  will  fall  on  the 
appointee  to  show  that  he  had  no  reasonable  oppor- 
tunity to  disclaim. 

IV.  Appointment.  —  No  trust  will  be  allowed  to  fail 
for  want  of  a  trustee,4  and  if  conveyance  is  made  to 
one  that  cannot  act,  or  if  those  who  have  been  nomi- 
nated disclaim,  or  if  all  .the  trustees  die,  the  property 
will  be  held  by  whoever  may  have  the  title  until  a 
proper  trustee  can  be  appointed.8 

In  case  of  need  the  court  will  appoint  a  temporary 
trustee  or  a  receiver,6  and  may  in  certain  contingencies 
administer  the  trust  itself,  though  such  a  course  is  very 
unusual.7 

The  power  to  make  an  appointment  will  arise  when- 
ever the  circumstances  make  it  necessary,  either  in  the 
nature  of  things,  as  in  the  case  of  the  death  or  dis- 

1  Flint  v.  Clinton  Co.,  12  N,  H.  432. 

2  Smith  v.  Knowles,  2  Grant's  Cases,  413. 
8  Adams  v.  Adams,  21  WalL  185. 

4  North  Adams  Universalist  Soc.  v.  Fitch,  8  Gray,  421 ;  Dodkin  v. 
Brunt,  L.  R.  6  Eq.  580 ;  Civil  Code  Cal.  (1903),  §  2289 ;  Revised  Civil 
Code  So.  Dak.  (1903),  §  1655  ;  Code  No.  Dak.  (1895),  §  4302.  See  to 
the  contrary  In  re  Sturges,  59  N.  Y.  S.  783. 

6  So,  also,  the  court  will  appoint  trustees  from  a  similar  class, 
where  the  class  of  persons  specified  no  longer  exist.  Boston  v.  Doyle, 
184  Mass.  373. 

6  Brightly's  Dig.  Pa.  (1894),  p.  2030,  §  18. 

7  Rogers  v.  Rogers,  1 11  N.  Y.  228 ;  Royce  v.  Adams,  123  N.  Y.  402! 
Wells,  Fargo  &  Co.  v.  Walsh,  88  Wis.  534.    Infra,  p.  170. 


8  APPOINTMENT 

claimer  of  all  the  trustees,  or  whenever  the  provisions 
of  the  trust  instrument  prescribe  it.  As  when  the  num- 
ber of  trustees  sinks  below  the  prescribed  number,1  or  a 
trustee  becomes  disqualified  by  going  abroad,  or  as  it 
may  be  otherwise  provided  in  the  instruments,  or  when 
the  safety  of  the  fund  or  the  proper  administration  of 
the  trust  requires  an  additional  trustee. 

But  the  power  of  appointment  under  the  trust  instru- 
ment will  only  arise  under  the  exact  terms  specified 
therein,  and  will  not  arise  under  similar  terms;  as,  for 
instance,  a  provision  that  a  trustee  shall  be  appointed 
on  one  of  the  trustees  becoming  "incapable,"  will  not 
give  rise  to  a  power  to  appoint  when  one  becomes  bank- 
rupt and  therefore'  "  unfit"  but  still  "  capable; " 2  or  in 
the  case  where  the  power  to  appoint  arose  on  the  refusal 
and  neglect  of  the  original  trustee  to  execute  the  trusts, 
and  he  died  without  executing  them,  the  power  did  not 
arise.8 

How  the  Trustee  is  appointed.  —  If  the  trust  instru- 
ment adequately  provides  a  method  to  be  pursued  in 
making  the  appointment  of  a  trustee,  the  court  has  no 
jurisdiction  in  the  case,  and  the  method  prescribed  must 
be  carefully  followed;  but  if  it  becomes  impossible  to 
follow  the  method  prescribed,  the  power  is  wholly  lost, 
and  the  appointment  must  be  made  by  the  court.4  As 
a  matter  of  precaution,  an  appointment  made  under  a 
power  in  a  settlement  should  be  recorded  with  the  settle- 
ment. 

In  some  States  the  power  to  appoint  the  trustee  is  given 
by  statute  to  the  beneficiary,  and  in  others  to  the  surviv- 
ing trustee,  but  usually  to  the  court. 

If  the  trust  is  under  a  will,  the  Probate  Court  has 

1  Mass.  Gen.  IIosp.  v.  Amory,  12  Pick.  445. 

2  Turner  v.  Maule,  15  Jur.  761. 

8  Guion  v.  Pickett,  42  Miss.  77  ;  Underbill,  p.  400,  n.  2. 

4  See  statutes.     Griswold  v.  Sackett,  21  R.  I.  210.    Infra,  p.  58. 


APPOINTMENT  9 

jurisdiction  of  the  estate,  and  the  appointment,  even  if 
made  under  the  terms  of  the  will,  according  to  the 
prevailing  statutory  law,  must  be  confirmed  by  a  de- 
cree of  the  court,  and  a  letter  issued,  although  the 
trustee's  powers  in  such  cases  come  from  the  settle- 
ment, and  not  the  court.1 

The  same  is  true  if  the  trust  be  under  the  jurisdic- 
tion of  the  court  for  any  reason.8 

If  for  any  reason,  either  to  fill  a  vacancy,  or  for 
the  security  of  the  fund,  or  convenience  of  the  benefi- 
ciaries, the  appointment  of  a  trustee  is  desirable,  and 
the  trust  instrument  does  not  contain  an  adequate  pro- 
vision for  appointing  the  trustee,  or  if  the  person 
holding  the  power  to  appoint  a  trustee  unreasonably 
refuses  or  neglects  to  act,8  the  court  will  appoint  a 
trustee  upon  the  application  of  any  person  interested 
in  the  trust,  whether  in  possession  or  remainder,* 
though  it  would  not  take  any  notice  of  the  application 
of  a  stranger.6 

All  persons  in  interest  must  be  parties  to  the  suit,.8 
but  less  parties  are  required  in  some  jurisdictions  by 
statute.7 

Ordinarily,  jurisdiction  in  these  matters  is  con- 
ferred on  the  Probate  Court  by  statute;  but  in  the  ab- 

1  The  appointment  of  any  voluntary  trustee  may  be  confirmed  by 
court  in  Maine.  Rev.  Stat.  (1903),  ch.  70,  §  13. 

*  In  Maine  a  trust  may  be  confirmed  by  court,  and  thus  come  under 
its  jurisdiction.    Rev.  Stat.  Me.  (1903),  ch.  70,  §§  13-15. 

8  Cone  v.  Cone,  61  S.  C.  512. 

*  Statutory  provisions  in  most  jurisdictions. 

6  Penn  v.  Brewer,  12  Gill&  J.  113;  Snyder  v.  Snyder,  1  Md.  Ch. 
295 ;  Smith  v.  Calloway,  7  Blackf.86;  Gulick  v.  Gnlick,3  AtL  R.  (N.  J.) 
354.  Creditors  or  even  transferees  of  stock  may  apply  to  have  a  trus- 
tee appointed.  Guarantee  Trust  Fund,  etc.  Co.  v.  Scott,  199  Pa.  St. 
471. 

*  Shaw  w.  Paine,  12  Allen,  293.    In  New  York  the  proceeding  was 
considered  as  being  in  rem  and  valid  without  any  parties.    Milbank  v. 
Crane,  25  How.  Prac.  193  ;  Wood  v.  Travis,  54  N.  Y.  S.  60. 

»  Pub.  Gen.  Laws  Md.  (1904),  Art.  16,  §  230. 


10  APPOINTMENT 

sence  of  statute  any  court  of  chancery  or  equity  will 
have  jurisdiction  among  its  ordinary  powers. 

The  court  will  have  jurisdiction  and  can  appoint  a 
trustee  if  the  person  who  holds  the  title  to  the  property  is 
within  its  jurisdiction,  or  if  the  property  itself  is  within 
its  jurisdiction  and  there  is  a  statute  by  which  the  title 
will  vest  in  the  new  trustee  appointed.1  In  the  absence 
of  such  statute  there  is  no  way  of  vesting  the  title,  and 
the  court  is  powerless.  The  operation  of  the  statute  is 
to  confiscate  the  title  of  the  person  out  of  the  jurisdic- 
tion, and  vest  it  in  the  appointee  of  the  court.2 

The  trustee  is  responsible  to  the  court  in  which  he  is 
appointed,  and  cannot  be  controlled  by  another  court, 
nor  can  his  appointment  be  attacked  collaterally. 

It  is  held  that  the  court  having  original  jurisdiction 
of  a  testamentary  trust  may  make  a  subsequent  ap- 
pointment, although  the  property  and  holder  of  the 
title  are  both  out  of  the  jurisdiction,8  but  it  is  hard 
to  see  what  effect  the  decree  can  have  unless  the 
trustee  be  aided  by  statute  or  be  reappointed  in  the 
jurisdiction  where  the  property  lies.  Statutes  exist  in 
some  jurisdictions  which  authorize  trustees  appointed 
in  other  States  to  recover  trust  property  in  the  State 
where  the  statute  exists.* 

So  too  by  statute,  where  the  sole  beneficiary  has 
moved  into  a  State  and  wishes  the  property  there  also, 
the  court  may  appoint  a  trustee;  but  this  case  seems 
open  to  the  same  criticism  as  the  foregoing.8 

No  attempt  will  be  made  to  state  the  rules  of  pro- 
cedure in  such  cases,  since  the  matter  is  one  of  prac- 

*  McCann  v.  Randall,  147  Mass.  81.    See  infra,  p.  166.     Annot. 
Stat.  Col.  (1891),  §  2535  ;  Gen.  Stat.  N.  J.  (1895),  p.  394,  §  112. 

2  McCanu  v.  Randall,  147  Mass.  81. 
8  Curtis  v.  Smith,  6  Blatchf.  537. 

*  Ky.  Stat.  (1899),  §§  4709,  4711 ;  Gen.  Stat.  N.  J.  (1895),  p.  3685, 
§  9 ;   Code  Va.  (1904),  §  2630 ;  Code  W.  Va.  (1906),  §  3249. 

6  Code  Ala.  (1896),  §  4200. 


TITLE  NECESSARY   TO   COMPLETE   APPOINTMENT       11 

tice,  though  simple,  requiring  care  and  professional 
advice,  as  the  consequences  of  administering  a  trust 
under  a  defective  appointment  may  be  serious,  since 
the  outgoing  trustee  is  not  relieved  and  is  still 
liable  for  the  trust,  and  the  incoming  trustee  is  acting 
wrongfully  as  trustee,  and  may  incur  heavy  liabilities 
without  any  right  to  indemnity  out  of  the  trust  estate, 
and  may  be  estopped  to  deny  the  regularity  of  the 
appointment.1 

Appointment  not  Complete  •without  Title  to  Property. 
—  The  appointment  of  a  trustee  is  not  complete  until  the 
title  to  the  trust  property  is  vested  in  him.  The  origi- 
nal trustees  under  a  will  get  title  to  the  real  estate  from 
that  instrument  itself,  but  do  not  get  title  to  the  personal 
estate  until  it  is  turned  over  by  the  executors,  usually 
after  a  considerable  interval. 

The  original  trustees  under  a  deed  will  have  the 
property  vested  in  them  by  the  conveyance. 

The  property  ordinarily  vests  in  later  appointees  by 
express  provisions  of  the  trust  instrument,  which  com- 
monly provides  that  on  the  appointment  of  a  new  trus- 
tee he  shall  become  entitled  to  and  vested  with  the  trust 
property ; 2  but  in  order  that  the  title  shall  pass  under  the 
terms  of  the  instrument,  all  the  prescribed  conditions 
concerning  the  appointment  must  have  been  accurately 
fulfilled.8 

In  many  jurisdictions  the  property  will  vest  in  the 
new  trustee  by  statutory  provision ;  *  but  this  vesting 

1  Wagnon  v.  Pease,  104  Ga.  417;  Cauhape  v.  Barnes,  135  Cal.  107. 

a  Ellis  v.  Boston,  H.  &  Erie  Railroad,  107  Mass.  1. 

8  Bumgarner  v.  Cogswell,  49  Mo.  259. 

*  Perry,  §  284,  n.  6;  Mass.  Rev.  Laws  (1902),  ch.  147,  §  6;  Laws 
Del.  (1893),  p.  709,  ch.  250,  and  p.  709,  ch.  95 ;  Gen.  Stat.  R.  I.  (1896), 
ch.  208,  §4  ;  Brightly's  Dig.  Pa.  (1894),  p.  2030,  §  26;  Rev.  Stat.  Mo. 
(1899),  §  4581 ;  Gen.  Stat.  Conn.  (1902),  §  250 ;  Gen.  Stat.  N.  J.  (1895), 
p.  3684,  §  4. 


12  TRUSTEE'S  BOND 

of  title  is  usually  confined  to  appointees  of  the  court ;  * 
and  even  where  the  donee  of  the  power  is  the  judge  of 
probate,  the  appointment  being  that  of  the  individual 
and  not  of  the  court,  the  title  will  not  pass  under  the 
statute.2 

Where  there  is  no  adequate  provision  in  the  trust 
instrument  and  no  statute  applicable,  conveyance  must 
be  made  by  whoever  holds  the  title ; 8  and  where  the  court 
appoints,  a  well-drawn  decree  will  contain  an  order  for 
the  necessary  conveyance.4 

Trustees'  Bonds. — Trustees  under  wills,  and  usually 
trustees  appointed  by  the  court,  are  required  to  give 
bond  to  the  court  for  the  faithful  performance  of  their 
trust,6  and  the  court  may  require  an  appointee  under  a 
power  in  the  instrument  to  give  bond  if  the  circum- 
stances require  it.6 

In  testamentary  trusts  these  bonds  are  required  to  be 
with  sureties,  unless  the  testator  has  expressly  excused 
the  trustee  from  furnishing  them,  or  unless  all  parties  in 
interest  join  in  requesting  the  exemption.  In  such  cases 
"all  persons  beneficially  interested"  refer  only  to  per- 
sons in  being  and  who  have  a  present  vested  interest  in 
the  estate,  and  not  to  persons  unascertained  and  not  in 
being.7 

It  is  not  unusual  for  a  trustee,  especially  if  he  be  a 
man  of  standing,  to  decline  a  trust  where  he  is  required 

1  Pub.  Gen.  Laws  Md.  (1904),  Art.  16,  §  226;   Gen.  Stat.  Kan. 
(1899),  §  7528;  Rev.  Laws  Minn.  (1905),  §3262;  Annot.  Stat.  Wis. 
(1898),  §  2094. 

2  Webster  Bank  v.  Eldridge,  115  Mass.  424,  amended  by  Stat.  1878. 
c.  254,  §  1,  so  as  to  vest  title  in  appointees  under  any  written  instrument. 

8  Loring  v.  Salisbury  Mills,  125  Mass.  138,  141. 
4  Rev.  Laws  Vt.  (1894),  §  2612;  Rev.  Stat.  Me.  (1903),  ch.  70,  §  5. 
For  further  discussion  see  pp.  191,192,  infra. 
6  Statutes  in  nearly  all  jurisdictions. 

6  Bowditcb  v.  Banuelos,  1  Gray,  220. 

7  Dexter  r.  Cotting,  149  Mass.  92. 


TRUSTEE'S  BOND  13 

to  furnish  security;  and  the  wiser  course  seems  to  be  to 
select  the  trustees  with  care,  and  trust  to  the  carefulness 
of  the  selection,  rather  than  to  take  a  less  desirable  in- 
dividual with  security,  since  continual  watchfulness  is 
required  to  be  sure  that  the  security  remains  sufficient 
and  that  no  depreciation  is  occurring,  and  bondsmen  are 
difficult  to  collect  from.1 

The  amount  of  the  bond  required  is  sufficient  to  cover 
with  a  margin  of  fifty  per  cent  the  personal  property  in 
the  trustee's  hands,  and,  if  there  is  a  power  of  sale  of 
real  estate  in  the  settlement,  sufficient  to  cover  the  value 
of  the  real  estate  also. 

A  trustee  who  has  not  furnished  sureties  may  be 
required  to  do  so,  if  at  a  later  time  the  court,  on  ap- 
plication of  any  one  in  interest,  considers  it  necessary 
for  the  safety  of  the  fund;  but  the  need  of  security 
must  appear  affirmatively.2 

When  the  court  orders  a  sale  of  real  estate  it  will 
ordinarily  order  the  trustee  to  file  a  bond  sufficient  to 
cover  the  price  received,  if  such  a  bond  has  not  already 
been  given. 

V.  Who  is  Trustee.  —  The  question  of  who  is  the 
trustee  and  who  is  to  administer  the  trusts  not  unfre- 
quently  arises. 

Any  person  who  intermeddles  with  the  trust  property 
is  a  trustee  de  son  tort,  and  is  accountable  as  such  to  the 

1  The  surety  on  a  trustee's  bond  occupies  a  particularly  disagreeable 
position.  He  is  not  only  liable  for  all  the  trustee's  defaults  while  he  is 
regularly  in  office,  but  even  for  his  failure  to  account  for  funds  received 
prior  to  the  date  of  the  bond,  Mclntire  v.  Linehan,  178  Mass.  263;  or 
for  a  debt  which  the  trustee  owes  the  estate  when  he  accepts  office. 
Bassett  v.  Fidelity  &  Deposit  Co.,  184  Mass.  210.  He  may  be  denied 
the  privilege  of  appearing  in  a  case  which  may  result  in  charging  him 
on  the  bond,  since  he  is  adequately  represented  by  the  trustee,  Shaw 
v.  Humphrey,  96  Me.  397 ;  and  he  is  not  protected  by  the  statutes  of 
limitation  any  more  than  the  trustee.  Blake  v.  Traders'  Nat'l  Bank, 
145  Mass.  13. 

a  Ladd  v.  Ladd,  125  Ala.  135. 


14  WHO   IS  TRUSTEE 

same  extent  as  though  he  were  duly  appointed.1  As,  foi 
instance,  the  executor  or  administrator  of  a  deceased  trus- 
tee, or  an  executor  or  administrator  who  meddles  with 
the  real  estate  of  the  deceased.2 

An  executor  who  has  the  duties  of  a  trustee  conferred 
on  him  by  the  will,  as  for  instance  the  payment  of  an 
annuity  out  of  part  of  the  estate,  even  though  he  quali- 
fies as  executor  only,  has  in  regard  to  that  property  the 
powers  he  would  have  if  he  qualified  as  trustee.8  That 
is  to  say,  though  the  trustee  calls  himself  an  executor,  if 
in  fact  he  acts  as  trustee  he  is  a  trustee,  and  not  an  ex- 
ecutor, in  the  eyes  of  the  law.4  In  Alabama,  Massachu- 
setts, and  Maine  the  sureties  on  his  bond  as  executor  are 
liable  for  his  acts  as  trustee,5  but  the  rule  is  otherwise 
elsewhere.6 

Where  the  same  person  is  appointed  executor  and  trus- 
tee under  a  will,  he  holds  the  property  as  executor 
until  he  has  settled  his  account  in  the  Probate  Court 
as  executor,  crediting  himself  with  any  funds  which 
he  holds  as  trustee,  or  done  some  other  notorious  act  of 
transfer.7 

Where  a  power  of  appointment  is  given  by  the  trust 
instrument  and  the  donee  appoints  new  trustees,  the  sec- 

1  Brown  v.  Lambert's  Adm'r,  74  Va.  256. 

2  Perry,   vol.  1,  §§  245-247,   and  cases   cited.     Penn  v.  Folger, 
182  111.  76. 

8  Wheeler  v.  Perry,  18  N.  H.  307 ;  Carson  v.  Carson,  6  Allen,  397  ; 
Sheets's  Estate,  52  Pa.  St.  257  ;  Jewett  y,  Schmidt,  83  App.  Div.  (N.Y.) 
276. 

*  Philbin  v.  Thurn,  103  Md.  342.  He  should  qualify  as  trustee, 
Angus  v.  Noble,  73  Conn.  56 ;  City  of  Seattle  v.  McDonald,  26  Wash. 
98 ;  and  may  be  enjoined  from  performing  trustee's  duties  if  he  fails  to 
do  so.  Bentley  v.  Dixon,  60  N.  J.  Eq.  353.  The  case  of  In  re  Sheets's 
Estate,  215  Pa.  St.  164,  which  denies  the  executor's  right  in  such  cases 
to  qualify  as  trustee,  is  contrary  to  the  general  trend  of  authority. 

5  White  v.  Ditson,  140  Mass.  351 ;  Groton  v.  Ruggles,  17  Me.  137; 
Hall  v.  Cushing,  9  Pick.  395 ;  Perkins  v.  Moore,  16  Ala.  9. 

6  Drake  v.  Price,  5  N.  Y.  430. 

7  Crocker  v.  Dillon,  133  Mass.  91,  98.     See  infra,  p.  100. 


WHO   CAN   BE   TRUSTEE  15 

ond  set  of  trustees  in  point  of  time  will  not  necessarily 
administer  the  trust;1  but  if  the  property  be  given  to  the 
second  set  to  convert,  or  their  discretion  is  relied  on, 
they  will  take  the  property,2  and  it  is  immaterial  whether 
the  trusts  can  be  carried  out  or  not.8 

Where  a  general  power  of  appointment  is  exercised  by 
will,  the  executors  of  the  will,  not  the  trustees,  will  carry 
out  the  trust,  and  where  the  power  is  special  the  same 
rule  should  prevail  unless  the  appointment  is  directly  to 
the  objects  of  the  bounty  and  was  not  meant  to  pass 
through  the  executor's  hands.4 

VI.  Who  can  be  a  Trustee.  —  Any  person  that  has  the 
capacity  to  hold  the  title  to  the  property,  and  the  right 
to  exercise  the  powers,  may  be  a  trustee. 

A  corporation  having  such  capacity  and  rights  among 
its  charter  powers  is  such  a  person,  and  may  be  a 
trustee,5  even  in  a  jurisdiction  where  it  has  not  the  right 
to  do  business,  provided  it  gives  bond  with  domestic 
sureties  and  agrees  to  submit  to  the  jurisdiction  of  the 
court. 6 

An  alien  enemy  or  an  alien  in  a  jurisdiction  where 
he  cannot  hold  property  could  not  be  a  trustee.7 

The  sovereign  may  be  trustee,  but  the  beneficiary 
cannot  enforce  the  trust  except  by  petition,8  until  the 
property  is  conveyed  to  some  one  amenable  to  the  juris- 
diction of  the  court.9 

The  trust  estate  may  vest  in  a  lunatic  or  infant,  but 
they  will  be  removable.10  An  infant  may  be  compelled  to 

1  Ames,  p.  460,  n. ;  Busk  v.  Aldam,  L.  R.  19  Eq.  16. 

2  Onslow  v.  Wallis,  1  Hall  &  Twells,  513. 

8  Phil  brick's  Settlement,  34  L.  J.  Ch.  368 ;  Olney  v.  Balch,  154  Mass. 
318. 

4  Sargent  v.  Sargent,  168  Mass.  420. 

6  Attorney  General  v.  Landerfield,  9  Mod.  286 ;  Dublin  Case,  38 
N.  H.  577. 

6  Satterthwaite's  Estate,  47  AtL  Rep.  226,  227  (N.  J.  Eq.  1900). 

7  King  17.  Boys,  3  Dyer,  283. 

8  Briggs  v.  Light  Boat,  11  Allen,  157. 

9  Winona  Co.  v.  St.  Paul  Co.,  26  Minn.  179. 

10  Irvine  v.  Irviiie,  9  Wall.  617 ;  Swartwout  v.  Burr,  1  Barb.  495. 


16  WHO   CAN   BE  TRUSTEE 

convey  by  statute,1  and  so  long  as  infants  or  lunatics 
hold  the  property'  the  trust  will  be  administered  by 
the  court  through  them  or  their  guardians.2  Having  no 
discretion,  they  cannot  act  in  trust  affairs  any  more  than 
they  can  in  their  own  affairs,8  and  if  one  of  three  trus- 
tees is  an  infant  or  lunatic,  action  by  the  other  two  is 
barred.4 

At  common  law  a  wife  could  not  be  a  trustee  for  her 
husband,  but  she  may  be  now  in  most  jurisdictions  under 
the  statutory  rules.6 

A  trustee  should  be  "capable,"  that  is  to  say,  a 
person  having  the  legal  and  actual  capacity  to  hold  the 
title  to  the  trust  property  and  exercise  the  powers.  Thus 
the  trustee  should  be  a  person  of  full  age  and  sound 
discretion. 

He  should  be  "  fit,"  that  is  to  say,  a  person  in  whose 
hands  the  property  will  be  safe,6  and  who  will  be  im- 
partial in  the  administration  of  his  trust.  Thus  a 
bankrupt  is  not  a  "fit"  person,  as  being  unsuccessful  in 
Lis  own  affairs  he  is  not  likely  to  be  successful  in  those 
of  others,  and  a  drunkard  or  person  of  dishonest  or  of 
bad  character  is  unfit,  since  the  property  would  not  be 
safe  in  his  hands. 

So  too  a  beneficiary  is  an  unfit  person,  whether  he 
be  a  life  tenant  or  remainderman,  since  he  will  nat- 
urally be  partial  to  his  own  interests;7  and  for  sim- 
ilar reasons  a  near  relation  is  objectionable,8  although 
irt  this  country  they  are  more  often  appointed  than 

»  Brightly's  Dig.  Pa.  (1894),  p.  2033,  §46;  Gen.  Laws  R.l'(1896), 
ch.  208,  §  16 ;  Gen.  Stat.  N.  J.  (1895),  p.  3683,  §§  2,  3. 
'2  Ex  parte  Sergison,  4  Yes.  Jr.  147. 
8  Person  v.  Warren,  14  Barb.  488. 
*  King  v.  Bellord,  1  Hem.  &  M.  343.    Infra,  p.  55. 
6  Schluter  v.  Bowery  Savings  Banks,  117  N.  Y.  125. 

6  In  re  Barker's  Trusts,  1  Ch.  D.  43. 

7  Ex  parte  Conybeare's  Settlement,  1  Weekly  Rep.  458. 

8  The  court  in  Pennsylvania  refused  to  appoint  a  son  co-trustee  with 
his  father  where  three  trustees  were  required,  as  he  would  naturally  be 
dominated  by  his  father,  and  thus  there  would  be  but  two  trustees. 
Lafferty's  Estate,  198  Pa  St.  433.    But  the  court  was  divided. 


WHO   CAN   BE  TRUSTEE  17 

strangers.  The  fact  of  near  relationship  makes  the 
trustee  less  able  to  withstand  the  importunities  of  the 
beneficiaries,1  and  moreover  such  a  connection,  espe- 
cially where  a  parent  or  older  relation  is  trustee  for 
a  child,  is  too  often  made  an  excuse  for  lax  man- 
agement, and  the  knowledge  that  a  breach  of  trust  is 
likely  to  be  condoned  not  infrequently  leads  to  disre- 
gard of  strictly  legal  management,  which  is  the  only 
safeguard  of  trust  estates.  Deviation  from  the  rules  of 
strict  accountability  only  too  often  leads  to  speculation 
and  the  loss  of  the  property. 

A  court  will  not  appoint  a  husband  trustee  for  his 
wife,2  and  there  is  no  resulting  trust  between  husband 
and  wife;8  but  there  is  nothing  in  the  relationship 
of  husband  and  wife  absolutely  preventing  the  appoint- 
ment,4 and  the  maker  of  the  trust  may  make  such  an  ap- 
pointment. But  where  a  husband  is  trustee  for  his  wife, 
her  equitable  estate  is  supposed  to  be  reduced  to  posses- 
sion, and  may  be  attached  for  his  debts.6 

In  this  connection  it  may  be  said  that  the  trust  com- 
panies, which  have  of  late  years  become  so  numerous,  to 
a  considerable  extent  do  away  with  the  element  of  per- 
sonal risk  attaching  to  an  individual  trustee;  but  they 
lack  the  advantages  of  personal  management.  These 
companies  sometimes  fail  from  improper  management 
as  utterly  as  individuals  do,  and  as  a  rule  the  lack  of 
personal  management  results  in  securing  the  minimum 
return  only  on  the  amount  invested,  and  lacks  the  great 
advantages  often  secured  by  the  able  personal  oversight 
of  individual  trustees. 

1  Wilding  t>.  Bolder,  21  Beav.  222 ;  Parker  v.  Moore,  25  N.  J.  Eq. 
228,  240. 

8  Dean  v.  Lanford,  9  Rich.  Eq.  423. 

8  Jencks  v.  Alexander,  11  Paige,  619. 

4  Porter  v.  Bank  of  Rutland,  19  Vt.  410;  Livingston  v.  Livingston 
2  Johns.  Ch.  537. 

6  Shirley  v.  Shirley,  9  Paige,  363. 


18  APPOINTMENT  —  FITNESS 

VII.  Appointment  of  Trustee. — The  maker  of  the 
trust  in  making  his  appointment  is  bound  only  by  the 
consideration  of  the  legal  capacity  of  the  individual,  and 
may  appoint  a  person  actually  incapable  or  unfit,1  and 
his  appointee  will  be  removed  for  cause  only.2 

The  donee  of  a  power  to  appoint  may  also  use  his  dis- 
cretion in  determining  the  fitness  and  actual  capacity  of 
the  appointee ;  but  the  power  is  not  an  arbitrary  one,  and 
if  the  appointment  be  of  an  unfit  or  incapable  person  the 
court  may  review  it.8 

If  the  holder  of  the  power  be  himself  a  trustee,  he 
should  consult  his  beneficiaries  and  appoint  some  one 
agreeable  to  them;4  and  should  the  matter  of  the  ap- 
pointment become  a  matter  of  litigation,  the  power, 
though  discretionary,  cannot  be  exercised  without  the 
assent  of  the  court. 

Where  the  court  is  called  upon  to  appoint  a  trustee,  it 
will  appoint  only  a  person  who  is  actually  and  legally 
capable  and  fit,  and  within  its  jurisdiction;6  but  it  will 
have  due  regard  to  the  wishes  of  the  maker  of  the  trust 
if  they  can  be  discovered.6 

In  some  cases  the  court  will  appoint  a  non-resident 
where  the  beneficiaries  or  part  of  the  property  is  out  of 
its  jurisdiction.7  In  some  jurisdictions  it  is  forbidden 
to  do  so  by  statute,8  but  the  statutes  have  been  held  un- 
constitutional.9 


1  Robertson  v.  De  Brulatour,  111  App.  Div.  (N.  Y.)  882,  901,902. 

2  Wetmore  v.  Trnslow,  51  N.  Y.  338. 

8  Shaw,  C.  J.,  in  Bowditch  v.  Banuelos,  1  Gray,  220,  231.  As  a 
rule  he  should  not  appoint  himself,  but  may  do  so,  if  he  is  specially 
fit.  Montefiore  v.  Guedalla,  L.  R.  (1903),  2  Ch.  723. 

*  Perry,  §  297. 

6  Rev.  Stat.  Ind.  (1901),  §  3410. 

6  In  re  Tempest,  L.  R.   1  Ch.  485,  487.     See  Perry,  §  39 ;  Story, 
Eq.  Jur.,  llth  ed.,  vol.  2,  §  1289  b ;  Underbill,  p.  408. 

7  Ames,  250  n. ;  Brightly's  Dig.  Pa.  (1894),  p.  2039,  §  84. 

8  Rev.  Stat.  Ind.  (1901),  §  3410. 

9  Glink  w.  La  Fayette,  52  Fed.  Rep.  857. 


DEVESTMENT   OP   OFFICE  19 

If  all  the  beneficiaries  agree  on  a  person,  the  court 
will  nearly  always  appoint  him,  even  though  he  be  a 
beneficiary  or  otherwise  unfit.1 

The  laws  of  some  States  provide  for  a  public  trustee, 
who  will  be  appointed  whenever  the  beneficiary  shows 
that  his  trustee  is  absent  from  the  country  or  refuses  to 
act.2 

The  regularity  of  the  appointment  by  the  court  cannot 
be  questioned  in  any  collateral  preceding.8 

VIII.  Devestment  of  Office.  —  A  trustee  is  discharged 
(1)  by  extinction  of  the  trust,  (2)  by  completion  of  his 
duties,  (3)  by  such  means  as  the  instrument  contem- 
plates, (4)  by  consent  of  the  beneficiaries,  (5)  by  judg- 
ment of  a  competent  court.4 

The  trustee's  office  may  come  to  an  end  by  the  extinc- 
tion of  the  trust.  This  may  come  to  pass  either  by  the 
completion  of  the  purposes  of  the  trust,  as,8  for  instance, 
on  the  death  of  the  life  tenant  and  the  vesting  of  the  es- 
tate in  the  remainderman,6  or  in  the  case  of  a  trust  to 
enable  a  widow  to  support  her  children,  on  the  remar- 
riage of  the  widow,7  or  by  the  legal  title  and  benefi- 
cial title  merging  in  one  person.8 

If  the  trust  itself  continues  and  the  trustee  dies,  or  is 
under  a  natural  disability,  or  one  created  by  the  trust 
instrument,  if  there  be  more  than  one  trustee,  the  office 
will  vest  in  the  surviving  or  remaining  trustees,  even 
though  there  be  a  provision  in  the  instrument  for  keep- 
ing up  the  number  of  the  trustees. 9 

1  Young  v.  Young,  4  Cranch  C.  C.  499. 
*  Colorado  Laws  of  1894,  pp.  51-58,  §§  2-1 7.  | 
8  McKim  v.  Doane,  137  Mass.  195. 

4  Rev.  Civ.  Code   So.   Dak.   (1903),  §1651;  Rev.   Code  N.  Dak 
(1895),  §  4298;  Civ.  Code  Cal.  (1903),  §  2282. 
6  Ex  parte  Stone,  138  Mass.  476. 

6  Morgan  v.  Moore,  3  Gray,  319. 

7  Fox  v.  Storrs,  75  Ala.  265. 

8  Parker  v.  Converse,  5  Gray,  336. 

9  Warburton  v.  Sandys,  14  Sim.  622. 


20  DEVESTMENT   OP   OFFICE  —  RESIGNATION 

If  he  is  disabled,  the  title  will  remain  in  him  until 
a  new  trustee  is  appointed,  and  the  powers  will  be  sus- 
pended or  vested  in  the  court. 

If  a  sole  trustee  dies,  then  in  absence  of  statute  his 
executor  or  administrator  accepts  his  trusts  and  at  com- 
mon law  cannot  disclaim  them,  though  in  some  States  he 
may  disclaim  by  statutory  provision.  In  many  States  the 
statute  provides  that  the  executor  or  administrator  does 
not  succeed  to  the  decedent's  trusts,  and  in  such  cases 
the  office  vests  in  the  court,1  or  is  in  abeyance,  and 
will  vest  in  a  successor  when  appointed;  the  person  in 
whom  the  title  to  the  property  has  vested  in  the  mean- 
while, not  having  the  office  of  trustee  in  anything  but  a 
limited  extent,  namely,  to  preserve  the  property  and  act 
in  an  emergency  to  prevent  a  loss,  and  finally  convey  to 
the  new  trustee  when  appointed.2 

It  is  the  duty  of  the  executor  or  administrator  of  a 
deceased  trustee  to  settle  the  decedent's  trust  accounts, 
and  his  estate  is  liable  for  breaches  of  trust  committed 
in  his  lifetime.8 

The  guardian  of  an  insane  person  would  stand  in  the 
same  position  as  the  executor  of  a  deceased  trustee. 

The  trustee  cannot  abandon  his  trust,  and  even  if  he 
conveys  away  the  property  he  will  still  remain  liable  as 
trustee;*  but  he  may  resign.6 

Resignation.  —  The  resignation  in  most  jurisdictions 
may  be  at  pleasure,6  and  in  any  jurisdiction  for  good 
reason.7 

1  Milbank  v.  Crane,  25  How.  Prac.  193. 

2  Mortimer  v.  Ireland,  11  Jurist,  721 ;   Ames,  510,  n.    Infra,  p.  54. 
8  Dodd  v.  Wilkinson,  41  N.  J.  Eq.  566 ;  Perry,  §  344. 

4  Webster  v.  Vandeventer,  6  Gray,  428. 

«  Mass.  Rev.  Laws  (1902).  ch.  147,  §  12. 

«  Bogle  v.  Bogle,  3  Allen,  158;  Ellis  v.  Boston,  H.  &  E.  Railroad, 
107  Mass.  1 ;  statutes  passim. 

7  Craig  v.  Craig,  3  Barb.  Ch.  76 ;  Dean  v.  Lanf ord,  9  Rich.  Eq. 
(S.  C.)  423. 


RESIGNATION   OF  TRUSTEE  21 

To  be  effective,  the  resignation  must  be  made  either 
according  to  an  express  provision  of  the  trust  instru- 
ment,1 or  with  the  assent  of  all  the  beneficiaries  or  the 
court.2 

The  assent  of  the  beneficiaries  must  be  unanimous; 
hence,  if  some  are  under  age,  unascertained,  unborn,  or 
incompetent,  a  valid  assent  cannot  be  given  by  the  bene- 
ficiaries, and  resort  must  be  had  to  the  court. 

The  mere  resignation  and  acceptance  thereof  will  not 
convey  the  title  to  the  property,  but  the  trustee  should 
then  devest  himself  of  the  property  by  suitable  convey- 
ances, and  complete  his  duties,  and  until  he  does  so  he 
will  remain  liable  as  trustee.8 

Even  where  all  persons  in  interest  assent,  it  has  been 
suggested  that  the  resignation  is  not  complete  without 
the  action  of  the  court,4  but  it  is,  to  say  the  least,  doubt- 
ful ;  and  especially  as  all  persons  who  are  likely  to  raise 
the  question  are  concluded  by  their  assent. 

The  resignation  need  not  be  in  writing,  and  where  a 
trustee  has  conveyed  the  trust  property  to  a  successor 
appointed  by  the  court,  there  being  no  evidence  of  any 
direct  resignation,  one  would  be  presumed.6 

Ordinarily  courts  of  probate  have  jurisdiction  in  these 
matters;  but  where  it  is  not  specially  given  to  them,  a 
court  of  equity  will  have  the  power  to  accept  a  resigna- 
tion among  its  ordinary  powers,  and  generally  has  con- 
current jurisdiction  where  the  Probate  Court  has  the 
power. 6 

The  court  will  not  accept  a  resignation  until  the  retir- 
ing trustee  has  settled  his  account,7  and  returned  any 

Stearns  v.  Fraleigh,  39  Fla.  603. 
Cruger  y.  Halliday,  11  Paige,  314. 
Ibid. 

Matter  of  Miller,  15  Abb.  Pr.  277. 
Thomas  v.  Higham,  1  Bail.  Eq.  222. 
Bowditch  v.  Banuelos,  1  Gray,  220. 
7  Statutes  passim.    In  re  Olmstead,  24  App.  Div.  (N.  Y.)  190. 


22  RESIGNATION  —  REMOVAL 

benefit  connected  with  the  office,1  and  in  some  jurisdic- 
tions they  will  require  a  successor  to  be  provided  for.2 

Where  there  is  more  than  one  trust  in  the  same  in- 
strument, the  rule  for  resignation  is  the  same  as  for 
acceptance;  namely,  unless  the  trusts  are  divisible,  all 
or  neither  must  be  resigned.3 

Removal.  —  The  beneficiaries  may  remove  a  trustee  if 
the  power  is  expressly  given  them  by  the  settlement,* 
but  this  power  is  usually  only  given  in  railroad  mort- 
gages and  the  like.  The  court  may  remove  a  trustee  for 
good  cause;5  but  the  application  is  addressed  to  the 
reasonable  discretion  of  the  court,6  and  each  case,  there- 
fore, stands  on  its  own  merits.7  The  power  is  among 
the  ordinary  powers  of  a  court  of  equity,8  but  jurisdic- 
tion in  such  cases  is  generally  given  to  the  Probate 
Courts  by  statute,  and  action  should  always  be  taken  in 
the  court  having  original  jurisdiction  of  the  trust.9 

All  persons  interested  in  the  trust  must  be  made  par- 
ties in  a  suit  for  a  removal.10  Cut  this  is  not  required 
where  the  parties  are  very  numerous,  as,  for  instance,  in 
a  railroad  mortgage.11 

1  Craig  v.  Craig,  3  Barb.  Ch.  76. 

2  Civ.  Code  Cal.  (1903),  §  2260;  Rev.  Civ.  Code  So.  Dak.  (1903), 
§  1638. 

8  Carruth  v,  Carruth,  118  Mass.  431. 

4  March  ».  Roman,  116  Fed.  Rep.  355,  Circ.  Ct.  App. 

5  Statutes  exist  in  most  jurisdictions  giving  courts  of  probate  juris- 
diction to  act  in  these  matters. 

6  Scott  v.  Rand,  118  Mass.  215. 

7  A  number  of  examples  in  Underbill,  p.  393,  n. 

8  Dodkin  v.  Brunt,  L.  R.  6  Eq.  580.     As  to  who  are  interested,  see 
infra,  p.  158. 

9  Howard  v.  Gilbert,  39  Ala.  726.     Supra,  p.  8 ;  infra,  p.  189. 

10  Shaw  v.  Paine,   12  Allen,  293.     All  the   trustees,  and  all  former 
trustees  who  have  not  been  discharged,  are  interested  parties.     Hamil- 
ton v.  Faber,  33  Misc.  Rep.  (N.  Y.)  144.    As  to  other  parties  inter- 
ested,  see  infra,  p.  158. 

11  Farmers'  Loan  &  Trust  Co.  v.  Lake  Street  Elevated  Railroad 
68  111.  App.  666. 


REMOVAL   FROM    OFFICE  23 

Ordinarily  a  trustee  will  be  removed  who  refuses  to 
give  bond,1  or  who  has  been  guilty  of  a  wilful  breach  of 
trust,  or  who  wastes  or  mismanages  the  trust  property, 
or  who  refuses  to  account,2  or  who  is  a  minor,  lunatic,8 
drunkard,4  or  a  person  of  such  bad  habits  that  the  prop- 
erty is  in  danger  in  his  hands;6  and  the  fact  that  he  is 
the  testator's  son  and  has  a  discretionary  power  of  pay- 
ing the  income  will  not  protect  him  if  he  mingles  the 
funds  with  his  own  and  refuses  to  account.6 

So  too  a  trustee  will  be  removed  who  denies  the  trust 
or  is  unfriendly  to  it,7  who  unreasonably  or  corruptly 
disagrees  with  his  co-trustee, 8  or  who,  having  a  discre- 
tionary power,  exercises  it  in  an  arbitrary  and  capricious 
manner,9  or,  having  a  discretionary  power  over  pay- 
ments to  his  beneficiary,  has  an  unreasonable  prejudice 
or  dislike  to  him  which  is  likely  to  defeat  the  purposes 
of  the  settlement,10  or  favors  one  beneficiary  to  the  preju- 
dice of  the  others,11  or  whose  relations  with  his  co-trustee 
or  the  beneficiaries  are  such  as  to  interfere  with  the  proper 
management  of  the  estate.12 

1  See  supra,  p.  4,  note  2. 

2  Stated  to  be  the  only  causes  in  Webb  v.  Dietrich,  7  Watts  &  Sar. 
401. 

8  Generally,  but  in  some  States  expressly  by  statute.  Rev.  Stat. 
N.  J.  (1895),  p.  3684,  §  4;  Gen.  Stat.  Conn.  (1902),  §  371 ;  Rev.  Stat. 
Me.  (1903),  ch.  70,  §  4 ;  Pub.  Stat.  N.  H.  (1901)  ch.  198,  §  8 ;  Vt.  Stat. 
(1894),  §  2610 ;  Rev.  Laws  Mass.  (1902),  ch.  147,  §  11. 

*  Generally,  but  in  some  States  expressly  by  statute.  Bates's  Annot. 
Ohio  Stat.  (1905),  §  6334  ;  Brightly 's  Dig.  Pa.  (1894),  p.  2035,  §§  59-61. 

5  The   statutes  existing  in  nearly  all  jurisdictions   generally   ex- 
pressly cover  one  or  more  of  the  above  cases.    They  should  be  referred 
to  in  each  case. 

6  Sparhawk  v.  Sparhawk,  114  Mass.  356. 

7  Irvine  v.  Dunham,  111  U.  S.  327  ;  Quackenboss  v.  Southwick,  41 
N.  Y.  117;  Polk  v.  Linthicnm,  100  Md.  615. 

8  Infra,  p.  55.  9  Infra,  p.  60. 

10  McPherson  v.  Cox,  96  U.  S.  404;  Wilson  v.  Wilson,  145  Mass. 
490.  Infra,  p.  61. 

U  Scott  v.  Rand,  118  Mass.  215. 

12  Disbrow  v.  Disbrow,  46  App.  Div.  (N.  Y.)  Ill;  In  re  Myer's 
Estate,  205  Pa.  St.  413. 


24  REMOVAL    FROM   OFFICE 

The  court  will  sometimes,  though  not  necessarily,  re- 
move a  trustee  who  becomes  a  bankrupt,1  or  goes  to  re- 
side permanently  without  its  jurisdiction ; 2  but  it  will 
not  remove  a  trustee  simply  because  he  is  poor,8  or  to 
satisfy  the  caprice  of  a  beneficiary;4  or  because  he  is 
prejudiced  against  or  dislikes  a  beneficiary  where  he  has 
no  discretionary  power  over  the  payments  to  him.5  Nor 
will  a  trustee  be  removed  for  the  non-exercise  of,  or  the 
manner  in  which  he  exercises,  a  discretionary  power, 
provided  he  is  honest  and  reasonable  in  the  use  or  non- 
use  of  his  discretion.  Nor  will  a  trustee  be  removed  for 
a  technical  breach  of  trust,  or  one  made  unintentionally 
or  through  mistake. 6 

i  Paddock  v.  Palmer,  6  How.  Pr.  215. 

a  Gulp's  Estate,  5  Pa.  C.  C.  B.  582 ;  Brightly's  Dig.  Pa.  (1894),  p.  2037, 
§  70;  Hughes  v.  Chicago  Co.,  47  N.  Y.  Sup.  Ct.  531. 
8  Jones  v.  McPhillips,  77  Ala.  314. 
*  McPherson  v.  Cox,  96  U.  S.  404. 

5  Nickels  v.  Philips,  18  Fla.  732 ;  Forster  ».  Davies,  4  DeG.,  F.  &  J. 
133. 

6  Haines  v.  Elliot,  77  Conn.  247  ;  and  see  Perry,  §§  275  to  287,  and 
Underbill,  p.  393,  n.,  for  other  instances. 


PART   II. 

THE  INDIVIDUAL  AS  TRUSTEE. 
1.  INCIDENTS  OF  TRUST  ESTATE. 

Ownership.  —  In  every  trust  there  are  two  estates, 
that  of  the  trustee  or  the  legal  estate,  and  that  of  the 
beneficiary  or  the  equitable  estate. 

These  two  estates  are  separate  although  bound  to- 
gether and  travelling  on  parallel  lines,  and  they  will  be 
treated  separately  in  this  treatise;  the  trustee's  estate 
here,  and  the  beneficiary's  estate  later  on.1 

The  trustee's  estate  consists  in  the  ownership  of  the 
property  itself,2  and  the  beneficiary's  in  his  right  in  a 
court  of  equity  to  compel  the  trustee  to  carry  out  the 
provisions  of  the  trust,  but  not  in  any  estate  in  the 
property  itself. 

The  tendency  in  America  is  to  merge  legal  and  equi- 
table rights,8  and  for  courts  of  law  to  act  on  equitable 
principles.  Statutes  that  reduce  the  legal  estate  to  a 
mere  power,  as  in  New  York  and  other  Code  States,  and 
the  refusal  of  a  court  of  law  to  allow  trust  property  to 
be  sold  on  execution,  are  examples  of  these  tendencies 
that  might  be  largely  multiplied.4 

Nevertheless  a  trustee  in  either  a  court  of  law  or 
equity  is  the  absolute  owner  of  the  trust  property  as  to 
the  whole  world,  and  may  eject  even  the  beneficiary  from 

1  /n/ro,  p.  157. 

2  By  statutory  enactments  in  most  Code  States. 
'  Lowell,  Transfer  of  Stock,  §  37. 

*  Infra,  p.  49. 

25 


26  OWNERSHIP   OP  PROPERTY 

the  premises,1  and  is  accountable  to  no  one  in  the  world 
but  the  beneficiaries  for  his  use  of  the  ownership.2  The 
popular  error  that  the  trustee  is  merely  the  agent  of  the 
beneficiary  expresses  an  entirely  erroneous  and  mis- 
chievous conception  of  the  trustee's  relationship  to  the 
property  and  his  beneficiary. 8  In  a  case  of  agency  the 
principal  owns  the  property,  and  the  agent  acts  in  his 
name  and  place ;  in  a  trust  the  trustee  owns  the  property, 
acts  in  his  own  name,  and  the  beneficiary  has  no  prop- 
erty rights,  but  a  claim  against  the  trustee  only. 

In  the  case  of  an  agency  the  person  with  whom  the 
agent  contracts  may  sue  his  principals  on  the  contract; 
he  has  no  such  rights  against  the  beneficiaries  in  a  trust.  * 

As  Owner  of  the  Property,  all  the  Incidents  of  Own- 
ership fall  to  the  Trustee.  —  All  actions  against  strangers 
either  at  law  or  in  equity  for  damage  to  or  loss  of  the  prop- 
erty,5 and  all  actions  to  protect  or  recover  it  must  be 
brought  in  the  name  of  the  trustee.  And  the  trustee  may 
sue  and  be  sued  without  any  joinder  of  the  beneficiaries,6 
where  the  relations  between  the  trustee  and  beneficiary 
are  not  in  question,  and  his  interests  are  adequately 
represented  by  the  trustee.7  It  was  held  in  a  foreclosure 
suit  that  the  beneficiary  had  the  right  to  raise  money  and 
should  therefore  be  joined,8  but  the  weight  of  authority 
is  otherwise. 9  In  some  jurisdictions,  as  Alabama,  New 

1  Devin  v.  Hendershott,  32  Iowa,  192. 

2  Wetmore  v.  Porter,  92  N.  Y.  76. 
8  Beach  v.  Beach,  14  Vt.  28. 

*  Everett  v.  Drew,  129  Mass.  150. 

6  Davis  v.  Charles  River  Branch  Rd.,  11  Cosh.  506;  Morgan  v. 
K.  P.  Rd.  Co.,  21  Blatch.  134. 

6  Carey  v.   Brown,  92   U.  S.   171.     Generally,  but  expressly  by 
statute  in  many  jurisdictions.     See  infra,  p.  75. 

7  Vetterlein  v.  Barnes,  124  U.  S.  169. 

8  U.  S.  Trust  Co.  v.  Roche,  41  Hun,  549. 

9  Van  Vechten  ».  Terry,  2  Johns.  Ch.  1 97 ;   Price  v.  Krasnoff, 
60  S.  C.  172;  Pyle  v.  Henderson,  55  W.  Va.  122. 


INCIDENTS   OF   OWNERSHIP  27 

York,  and  South  Carolina,  beneficiaries  are  by  statute 
necessary  parties.1 

If  the  beneficiary  is  in  the  possession  of  trust  prop- 
erty he  may  sue  for  an  injury  to  his  possession  to  the 
same  extent  as  any  other  bailee  of  property;2  but  as 
against  all  the  world  olher  than  the  beneficiary,  the 
trustee's  right  to  possession  is  absolute,  and  cannot  be 
questioned. 

If  the  trustee's  right  of  action  is  barred  by  the  statute 
of  limitations,8  or  if  he  lose  his  right  of  action  in  any 
manner,  the  right  is  absolutely  lost,4  and  the  beneficiary 
is  equally  barred  and  has  no  other  rights  which  he  can 
enforce  against  the  property  or  a  stranger.6 

The  trustee,  and  not  the  beneficiary,  is  entitled  to  vote 
as  stockholder  in  corporations,6  and  the  trustee,  as  an 
owner  of  stock,  is  eligible  as  a  director,  and  the  benefi- 
ciary is  not.7 

In  the  absence  of  statute  to  the  contrary,  the  trustee 
is  personally  liable  as  stockholder  even  beyond  the  ex- 
tent of  the  trust  property,8  but  his  liability  is  generally 
limited  by  statute  to  the  extent  of  the  trust  estate.9 
Whether  he  himself  has  a  right  to  be  reimbursed  by  the 


1  Ames,  261,  n. 

2  As  to  his  rights,  see  infra,  pp.  158,  168. 

8  Wych  v.  East  India  Co.,  3  P.  Wms.  309 ;  Walton  v.  Ketchum, 
147  Mo.  209 ;  Wiess  v.  Goodhne,  98  Tex.  274. 
*  Meeks  v.  Olpherts,  100  U.  S.  564. 
6  Molton  v.  Henderson,  62  Ala.  426. 

6  Barker  v.  Mercantile  Tns.  Co.,  6  Wend.  509 ;  Lowell,  Transfer  of 
Stock,  §  27  ;   Herron  v.  Marshall,  42  Am.  Dec.  444  and  note. 

7  By  statute  in  most  States. 

8  Ames,  279,  n. ;  Lowell,  Transfer  of  Stock,  §  28 ;  Lewin,  p.  252. 

9  Pub.  Stat.  N.  H.  (1901),  ch.  150,  §20;   Rev.  Stat.  Me.  (1903) 
Qh.  47,  §  84 ;  Gen.  Laws  R.  I.  (1896),  ch.  180,  §  26  ;  Rev.  Stat.  N.  Y. 
(1901),  p.  1422,  §  54 ;  Burns's  Annot.  Ind.  Stat.  (1901 ),  §  3431 ;  Rev.  Stat. 
HI.  (1905)  ch.  32,  §  23  ;  Stat.  Minn.  (1894),  §  3419  ;  Wash.  Code  (1897), 
§  4268;  Mont.  Civil  Code  (1895),  §  608;  Rev.  Stat.  Wy.  (1899),  §  3050  ; 
Code  S.  C.  (1902),  §  1843,  cl.  19  ;  Gen.  Stat.  Fla.  (1906),  §§  2657,  2700  ; 
D.  C.,  Cogley's  Dig.  (1892),  p.  162,  §  13O;  Comp.  Laws  N.  M.  (1897), 


28  INCIDENTS  OF  OWNERSHIP 

trust  estate,  or  whether  the  creditor  can  pursue  the  trust 
assets,  is  immaterial  to  the  action,  as  the  ultimate  liability 
of  the  trust  estate  cannot  be  settled  in  a  suit  at  law.1 

The  trustee  is  personally  liable  on  the  contracts  which 
he  makes  in  respect  to  the  trust  property,  and  if  he 
is  not  bound  nobody  is  bound;2  and  this  fact  empha- 
sizes the  difference  between  a  person  acting  as  trustee 
who  binds  only  himself,  and  one  acting  as  agent  who 
binds  his  principal.  Even  his  co-trustee  need  not  be 
joined  in  the  action,  since  the  contract  is  the  personal 
contract  of  the  trustee  making  it.8  By  using  appro- 
priate expressions  the  trustee  can  exempt  himself  al- 
together from  personal  liability  or  limit  his  liability  to 
the  extent  of  the  trust  estate;4  but  it  is  erroneous  to 
suppose  that  he  does  so  by  describing  himself  or  sign- 
ing his  name  with  the  word  "  trustee"  or  "  as  trustee" 
added.6 

Unless  he  is  expressly  exempted  from  liability  by  the 
contract  itself  he  will  be  personally  liable  even  on  a  con- 
tract made  under  order  of  the  court.6  If  he  has  the 
power  to  contract  for  the  benefit  of  the  trust,  and  if  he 
properly  describes  himself  as  trustee,  the  contract  will 
bind  the  trust  effects  in  his  hands  and  those  of  his  suc- 


§430;  Annot.  Stat.  Col.  (1891),  ch.  30,  §495;  Pub.  Gen.  Laws  Md. 
(1904),  Art.  23,  §  74 ;  unless  he  voluntarily  invested  in  it,  New  York. 
But  not  personally  on  contract  in  mutual  insurance  companies, 
Mass.  Rev.  Laws  (1902),  ch.  118,  §  40. 

1  Hampton  v.  Foster,  127  Fed.  468. 

2  Taylor  v.  Davis,  110  U.  S.  330;   Shoe  &  Leather  Nat'l  Bank 
v.  Dix,  123  Mass.  148;   Hussey  v.  Arnold,   185  Mass.  202.     Infra, 
p.  158. 

8  Diamond  v.  Wheeler,  80  App.  Div.  (N.  Y.)  58. 

*  Shoe  &  Leather  Nat'l  Bank  v.  Dix,  123  Mass.  148 ;  Hnssey  v. 
Arnold,  185  Mass.  202. 

6  Shoe  &  Leather  Nat'l  Bank  v.  Dix,  123  Mass.  148 ;  Taylor  v. 
Davis,  110  U.  S.  330 ;  Perry,  §  437  b. 

8  Gill  v.  Carmine,  55  Md.  339 ;  Glenn  v.  Allison,  58  Md.  527.  Infra, 
p.  145. 


LIABILITY   AS   OWNER  29 

cessor,  although  recourse  will  be  had  to  him  in  the  first 
instance.1 

So,  too,  a  trustee  will  be  personally  liable  on  the  cov- 
enants in  a  deed  or  lease,  whether  he  signs  as  trustee  or 
not;  and  it  is  important  in  this  connection  to  bear  in 
mind  that  there  is  an  implied  covenant  for  quiet  enjoy- 
ment on  behalf  of  the  lessor  in  every  lease.2 

Taxation.  —  The  trustee  is  personally  liable  for  tax- 
ation. In  the  absence  of  statute,  on  the  personal  prop- 
erty where  he  resides,  and  on  land  where  the  land  lies ; 8 
but  statutes  are  not  unusual  making  the  personal  tax 
payable  where  the  beneficiary  resides  who  is  entitled  to 
the  income. 

When  both  the  trustee  and  beneficiary  are  non-resi- 
dent, the  personal  property  is  not  taxable  to  any  one.4 

A  statute  making  the  property  taxable  where  the  bene- 
ficiary lives,  when  neither  the  trustee  nor  the  property 
are  within  the  State,  is  constitutional.5 

In  many  jurisdictions  it  is  the  trustee's  duty  to  bring 
in  a  list  of  the  trust  property  for  taxation,  and  in  others 
he  may  do  so.  A  trustee  who  neglects  his  duty  would  be 
personally  liable  for  the  penalty  of  his  neglect;  and 
where  he  neglects  his  opportunity  to  file  a  list,  and  the 
property  is  over  assessed,  and  owing  to  his  neglect  the 
over  assessment  cannot  be  recovered,  he  would  probably 
not  be  able  to  charge  the  over  assessment  to  the  trust. 

Personally  liable  as  Owner  of  Property.  —  The  trustee 
is  personally  liable  as  owner  of  the  trust  property  in  the 

1  Hampton  v.  Foster,  127  Fed.  468.    Infra,  pp.  77,  78. 

2  Infra,  p.  75. 

8  Richardson  v.  Boston,  148  Mass.  508 ;  Greene  et  al.  v.  Mumford 
at  al.,  4  R.  I.  313. 

*  Dorr  v.  Boston,  8  Gray,  131 ;  Anthony  v.  Caswell,  15  R,  L  159; 
Ames,  279,  n. 

4  Hunt  v.  Perry,  165  Mass.  287. 


30  LIABILITY   AS   OWNER 

same  way  and  to  the  same  extent  as  if  he  owned  the 
property  individually.  Thus  he  is  personally  liable  for 
a  nuisance  on  the  trust  premises,1  for  a  defective  coal 
hole  or  sidewalk,2  or  for  snow  falling  from  the  roof  of  a 
building  belonging  to  the  trust  estate.8  So,  too,  he  is 
personally  liable  if  through  operations  on  the  trust  prop- 
erty his  neighbor's  building  is  unlawfully  let  down  or 
his  land  flooded.4 

If  the  trustee  employs  servants  about  the  trust  business 
he  will  be  personally  liable  for  their  torts  equally  as  if  he 
had  employed  them  for  his  own  affairs.5  His  liability  as 
stockholder  in  a  corporation  has  been  already  noticed.6 
This  liability  as  owner  is  entirely  irrespective  of  the 
trustee's  right  to  be  indemnified  by  the  trust  estate, 
which  it  was  consistently  held  could  not  be  adjudicated 
in  a  legal  action  in  a  court  of  law.  Hence  describing 
the  trustee  in  the  writ  "  as  trustee  "  was  held  to  be  sur- 
plusage,7 judgment  was  entered  against  him  individually 
and  execution  issued  against  his  own  goods  and  not 
those  of  the  trust.8 

The  tendency  of  courts  of  law  to  adopt  equitable  prin- 
ciples in  dealing  with  trust  estates,  which  has  already 
been  referred  to,  has  modified  this  doctrine,  and  it  is  now 
pretty  generally  held  that  where  the  trustee  has  a  right 
of  indemnity  against  the  trust  estate  he  may  be  sued  as 
trustee  and  execution  will  issue  against  the  trust  prop- 
erty; but  if  the  trust  property  is  insufficient  to  satisfy 
the  execution  the  balance  can  be  collected  from  him  per- 
sonally.9 In  other  words,  the  plaintiff  is  subrogated  to 

1  Schwab  v.  Cleveland,  28  Hun,  458. 

2  O'Malley  v.  Gerth,  67  N.  J.  Law,  610. 
8  Shepard  v.  Creamer,  160  Mass.  496. 

*  In  re  Reybould,  1  Ch.  (1900),  199. 

5  Prinz  v.  Lucas,  210  Pa.  St.  620.  6  Supra,  p.  27. 

7  Shepard  v.  Creamer,  ul  supra;  Baker  v.  Tibbetts,  162  Mass.  468. 

8  Hampton  v.  Foster,  127  Fed.  468;  Odd  Fellows  Hall  Ass'n  v. 
McAllister,  152  Mass.  292,  p.  297. 

9  Wylly  v.  Collins,  9  Ga.  223. 


LIABILITY   AS   OWNER  31 

the  trustee's  right  of  indemnity,1  which  is  convenient 
for  him,  as  the  trust  estate  is  not  infrequently  larger  than 
the  trustee's. 

The  trustee  has  no  right  to  indemnity  from  the  trust 
estate  where  his  neglect  causes  the  accident.  The  law 
does  not  allow  the  trust  estate  to  be  diminished  by  the 
trustee's  neglect  or  default.2  Where,  however,  the  trustee 
has  been  conducting  the  trust  business  reasonably  and 
carefully,  he  will  have  a  right  to  be  indemnified  for  judg- 
ments recovered  against  him.  As,  for  instance,  where  the 
plaintiff  is  injured  by  a  falling  limb,  although  the  trustee 
is  using  due  care  in  having  the  wood  cut;8  or  where  the 
plaintiff  is  injured  by  the  careless  driving  of  a  servant  of 
a  trustee,  who  is  lawfully  carrying  on  the  testator's  busi- 
ness;* or  where  the  plaintiff's  buildings  are  let  down  by 
mining  operations  carefully  conducted  on  the  trust  prop- 
erty.5 In  all  these  cases  the  trustee  was  held  to  have  a 
right  of  indemnity  from  the  trust  estate,  and  the  plaintiff 
was  allowed  to  recover -against  him  as  trustee. 

Reasoning  from  the  analogy  of  the  trustee's  responsi- 
bility for  debts,  even  in  those  jurisdictions  that  deny  his 
right  to  hold  the  trust  estate  in  an  action  at  law,  he 
might  go  against  the  trust  estate  in  equity,  subrogating 
himself  to  the  trustee's  right  to  indemnity.  This  indi- 
rect remedy  would  seem  to  have  the  disadvantage  of  mak- 
ing him  subject  to  all  set-offs  against  the  trustee. 6 

The  trustee  as  owner  of  the  property  is  liable  crimi- 
nally for  a  nuisance  on  it,7  and  may  be  indicted  under 
liquor  or  gambling  laws. 


1  In  re  Johnson,  1 5  Ch.  Div.  548,  p.  552. 

2  Parmenter  v.  Barstow,  22  R.  1. 245. 

8  Bennett  v.  Wyndham,  4  DeG.,  F.  &  J.  258. 
*  Prinz  v.  Lucas,  210  Pa.  St.  620. 
6  In  re  Reybold,  1  Ch.  (1900)  199. 

6  Mason  v.  Pomeroy,   151  Mass.  164;  Dowse  v.  Gorton,  40  Ch.  D. 
536  ;  Mayo  v.  Moritz,  151  Mass.  481.    Infra,  p.  48. 

7  People  v.  Townsend,  3  Hill,  429. 


32    THE  TRUSTEE'S  OWNERSHIP  is  NOT  BENEFICIAL 

The  Trustee's  Ownership  is  not  Beneficial.  —  Although 
the  trustee  is  the  absolute  owner  of  the  property,  he  can 
take  no  benefit  from  his  ownership,  and  he  may  not  deal 
with  the  estate  for  his  own  profit,  or  for  any  purpose  un- 
connected with  the  trust.1  All  the  benefits  belong  to  the 
beneficiaries,  and  the  trustee  has  no  more  right  to  any 
of  them  than  he  has  to  the  property  of  a  stranger.  All 
his  skill  and  labor  must  be  directed  to  the  advancement 
of  the  interests  of  his  beneficiaries.2  He  may  take  no 
benefit  directly  or  indirectly  from  the  estate  or  his  office, 
except  the  regular  compensation  allowed  by  law,  and  if 
he  take  a  present  or  be  paid  a  bonus  or  commission  of 
any  kind  in  a  trust  transaction  by  a  stranger,  he  must 
account  to  the  trust  for  it.8  He  cannot  set  off  his  own 
debts  in  equity  against  one  who  sues  him  as  trustee.4 

He  cannot  use  the  real  estate  or  chattels,  or  pledge  any 
of  the  property,  as  security  for  his  debts.  Nor  can  he 
purchase  them  directly  or  indirectly  at  public  or  private 
sale,6  except  by  arrangement  with  all  the  beneficiaries. 
In  which  case  he  does  not  get  a  merchantable  title,  as 
the  burden  is  on  him  to  show  affirmatively  that  the  benefi- 
ciaries were  all  sui  juris,  informed  of  all  the  facts,  and 
dealt  at  arm's  length;6  but  he  may  purchase  under 
leave  of  court,7  or  at  a  judicial  sale  which  he  does  not 
control  in  any  manner.8  Nor  can  a  husband  or  wife  be- 

1  Cal.  Civil  Code  (1903),  §  2229;  Rev.  Civ.  Code  So.  Dak.  (1903), 
§1618;   Code  of  Ga.  (1895),    §  3183;    Rev.   Code   N.  Dak.  (1895), 
§  4265. 

2  Arnold  v.  Brown,  24  Pick.  89,  96. 
8  Infra,  p.  35. 

*  Infra,  p.  49. 

6  Hoyt  v.  Latham,  143  U.  S.  553;  Morse  v.  Hill,  136  Mass.  60; 
Amer.  &  Eng.  Encyc.  Law,  vol.  27,  p.  197 ;  Hayes  v.  Hall,  188  Mass. 
511  and  cases  cited.  Infra,  p.  70. 

6  Williams  v.  Scott  (1900),  Eng.  App.  Cases,  499. 

7  Morse  v.  Hill,  136  Mass.  60,  67 ;  Colgate  v.  Colgate,  8  C.  E.  Green, 
372,  p.  383. 

8  Allen  v.  Gillette,  127  U.  S.  589 ;  Starkweather  v.  Jernillo,  27  App. 
D.  C.  348. 


THE  TRUSTEE'S  OWNERSHIP  is  NOT  BENEFICIAL    33 

ing  trustee  sell  to  the  other,1  even  though  the  other  be  a 
beneficiary.  It  is  immaterial  that  the  price  paid  is  a  fair 
one.  The  transaction  is  a  breach  of  trust,  and  may  be 
set  aside  by  the  beneficiary,2  but  no  stranger  to  the  estate 
can  question  the  transaction.8 

If,  however,  the  property  be  honestly  sold  to  a  third 
person,  there  being  no  scheme  to  repurchase,  the  trustee 
is  not  disabled  from  buying  it  subsequently.4  Similarly 
he  cannot  sell  any  property  to  the  trust.6 

He  cannot  speculate  with  the  trust  funds  under  the 
guise  of  a  loan  to  himself ; 6  if  he  does,  all  the  profit  will 
belong  to  the  trust,  and  if  the  profit  does  not  equal  in- 
terest he  must  pay  interest.7  If  there  is  a  loss  he  must 
stand  it.8 

He  cannot  borrow  the  trust  funds  on  any  security,  and 
he  should  not  lend  them  to  his  family  or  associates  on 
any  terms.9 

He  cannot  swell  his  personal  credit  by  keeping  a  large 
balance  of  the  trust  funds  at  his  banker's. 

1  Scottish  Amer.  Mortgage  Co.  v.  Clowney,  70  S.  C.  229 ;  Hayes 
v.  Hall,  188  Mass/510;  Davoue  v.  Fanning,  2  Johns.  Ch.  (N.  Y.)  252. 
In  Lingke  v.  Wilkinson,  57  N.  Y.  445,  it  was  held  that  a  trustee  might 
sell  to  his  son,  but  two  judges  dissented,  and  the  principle  is  very 
doubtful. 

2  Denholm  v.  McKay,  148  Mass.  434 ;  Davoue  v.  Fanning,  2  Johns. 
Ch.  (N.  Y.)  252;   Quirk  v.  Liebert,   12  App.  D.  C.  394;   Smith  v. 
Miller,  98  Va.  535.     Infra,  p.  155. 

8  Harrington  v.  Brown,  5  Pick.  519 ;  Bronson  r.  Thompson,  77 
Conn.  214. 

4  Creveling  v.  Fritts,  34  N.  J.  Eq.  134 ;  Dry  Goods  Co.  v.  Gideon, 
80  Mo.  App.  609. 

6  Re  Long  Island  Loan  &  Trust  Co.,  92  N.  Y.  App.  Div.  1 ;  St.  Paul 
Trust  Co.  v.  Strong,  85  Minn.  1. 

6  Brown  v.  Ricketts,  4  Johns.  Ch.  303;  Townend  v.  Townend, 
1  Giff.  201. 

7  Piety  v.  Stace,  4  Ves.  Jr.  620. 

8  Docker  v.  Somes,  2  Mylne  &  Keen,  655. 

9  Kyle  v.  Barnett,  17  Ala.  306.  This  does  not  go  so  far  as  to  prohibit 
his  lending  to  a  corporation  in  good  standing,  because  he  is  a  stock- 
holder.   In  re  Rowe,  42  Misc.  Rep.  (N.  Y.)  172. 

3 


34    THE  TRUSTEE'S  OWNERSHIP  is  NOT  BENEFICIAL 

He  cannot  come  in  competition  with  the  trust  estate, 
nor  make  a  profit  by  buying  up  claims  against  the  estate 
at  a  discount,  directly  or  indirectly.1 

By  statute  in  some  jurisdictions  he  cannot  enforce  a 
claim  against  the  estate  acquired,  nor  make  a  profit  out 
of  the  trust  estate  in  any  other  manner.2 

Where  the  English  rule  prevails  which  refuses  compen- 
sation to  a  trustee,  he  should  not  employ  himself  or  his 
partner  to  render  expert  services  to  the  estate,  or  if  he 
does  he  may  receive  no  compensation  therefor.8  But 
in  most  other  jurisdictions,  if  he  could  have  given  such 
employment  legitimately  to  another,  he  may  render  it 
himself  and  receive  reasonable  compensation  for  his  ser- 
vices ;  as,  for  example,  where  he  acts  as  counsel,  broker, 
or  agent  to  collect.4  But  the  law  is  not  uniform,  and  in 
some  States  he  cannot  take  any  compensation.5 

In  practice  the  matter  is  a  delicate  one,  and  it  is  a  bet- 
ter rule  to  avoid  the  difficulty  altogether  by  employing 
a  stranger;  but  where  such  employment  is  allowed,  the 
charge  for  expert  services,  together  with  the  regular 
commission,  should  not  amount  to  more  than  reason- 
able compensation  for  all  the  services  rendered.6 

1  Slade  v.  Van  Vechten,  11  Paige,  21 ;  King  v.  Cushman,  41  HI.  31. 

2  Rev.  Civ.  Code  So  Dak.  (1903),  §  1641 ;  Rev.  Code  N.  Dak.  (1895), 
§  4288;  Civ.  Code  Cal.  (1903),  §  2263. 

8  In  re  Corsellis,  34  Ch.  Div.  675. 

4  Turnbull  v.   Pomeroy,  140   Mass.   117,  118;   Lowrie's   Appeal, 
i  Grant,  373;  Perkins's  Appeal,   108  Pa.   St.  314.    Perry,   §  432, 
contra. 

5  He  can  take  none  in  New  York,  Missouri,  or  South  Carolina. 
Collier  v.  Munn,  41  N.  Y.  143  ;  Gamble  v.  Gibson,  59  Mo.  585 ;  Mayer 
v.  Galluchat,  6  Rich.  Eq.  1.    The  reason  assigned  in  some  of  the  cases 
is,  that  a  trustee  cannot  fix  his  own  compensation,  because  he  will  have 
in  that  case  to  deal  with  himself.     See  Lord  Cranworth  in  Broughton 
v.  Broughton,  5  DeG.,  M.  &  G.  p.  160.     But  this  reason  is  not  wholly 
satisfactory,  as  it  is  conceded  that  he  can  collect  other  expenses,  etc. 

6  Turnbull   v.   Pomeroy,  140   Mass.   117,    118;   Lowrie's  Appeal, 
1   Grant,  373 ;    Perkins's   Appeal,  108   Pa.   St.   314 ;    Perry,   §  432, 
contra.     Infra,  p.  36. 


MAY  HAVE   EXPENSES   FROM   TRUST   FUND  35 

He  must  pay  over  to  the  trust  estate  any  bonus  he  re- 
ceives in  the  performance  of  his  duties,  or  for  resigning 
the  trust,1  but  he  need  not  account  for  the  profit  which  he 
receives  from  other  business  owing  to  the  fact  that  he 
is  a  trustee.2 

May  have  Expenses  from  Trust  Fund.  —  On  the  other 
hand,  the  trusteeship  should  not  be  a  burden,  and  the 
trustee  may  pay  from  the  estate  all  the  expenses  which 
he  incurs  as  owner,  such  as  taxes,  repairs,  and  insurance, 
and  he  may  charge  the  estate  irrespective  of  the  provi- 
sions of  the  settlement  with  all  the  legitimate  expenses 
of  management,8  as  travelling  expenses,4  the  cost  of  jus- 
tifiable litigation,6  and  expense  of  consulting  counsel 
when  there  is  reasonable  cause,6  and  if  he  be  not  at  fault 
judgments  recovered  against  him  as  owner  of  the  prop- 
erty,7 or,  where  the  employment  is  reasonable  and  usual, 
the  expense  of  brokers  or  agents,  or  the  expense  of  look- 
ing after  the  beneficiary,  as  for  instance  having  him  de- 
clared insane  and  placed  under  guardianship ; 8  and  in 
some  States  the  premium  paid  a  surety  company  on  his 
official  bond  may  be  charged  to  the  estate.9 

Ordinarily,  the  expense  of  accounting,  not  including 
court  expenses,  and  clerk  hire  and  office  rent,  are  in- 
cluded in  the  ordinary  allowance  made  as  compensation,10 
and  so  are  not  charged  to  the  trust ;  but  where  it  is  neces- 


1  Sugden  v.  Crossland,  3  Sim.  &  Giff.  192. 

2  Whitney  v.  Smith,  L.  R.  4  Ch.  App.  513. 

»  Perrine  v.  Newell,  49  N.  J.  Eq.  58 ;  Perry,  §  910. 
4  Rev.  Stats.  Me.  (1903),  ch.  65,  §  37. 

8  For  instance,  maintaining  the  validity  of  the  trusts.     Steinway 
v.  Steinway,  112  App.  Div.  (N.  Y.)  18. 

6  Forward  v.  Forward,  6  Allen,  494, 497  ;  Teague  v.  Corbitt,  57  Ala. 
529;  Rev.  Stat.  Me.  (1903),  ch.  65,  §  37. 

7  Supra,  p.  30.  8  Infra,  p.  83. 

9  As  to  apportionment  of  charges  between  income  and  principal, 
see  infra,  pp.  137  et  seq. 

w  Little  v.  Little,  161  Mass.  188. 


36  COMPENSATION 

sary  to  keep  a  clerk  exclusively  for  a  particular  trust,  it 
would  be  the  ground  for  an  extra  charge.1 

He  has  a  lien  on  the  estate  for  his  expenses,  and  may 
reimburse  himself  out  of  income  or  hold  possession  of 
the  corpus  of  the  estate  until  he  is  paid,2  but  not  if  he 
has  exceeded  his  powers,  has  been  guilty  of  a  breach  of 
trust,  or  is  in  default,3  or  has  denied  the  trust  and  in- 
volved the  estate  in  litigation.4 

Before  incurring  expense  he  may  require  security  if 
there  is  doubt  about  his  being  reimbursed,  and  he  has  a 
right  to  his  costs  prior  to  all  charges.6 

Compensation.  —  The  whole  matter  of  compensation  is 
subject  to  the  provisions  of  the  settlement  ; 6  in  the  ab- 
sence of  these  in  England  and  Delaware7  the  trustee 
cannot  charge  for  services ;  but  in  all  the  other  States 
he  is  entitled  to  reasonable  compensation.  The  amount 
of  the  compensation  is  fixed  by  statute  or  rule  of  court, 
and  is  usually  by  way  of  commission  8  on  the  gross  in- 
come collected,9  and  ranges  from  five  to  ten  per  cent. 
The  court  usually  allows  the  highest  amount  paid  agents, 
factors,  and  the  like  for  performing  similar  services.10 
The  trustee  may  agree  as  to  amount  of  commission  with 
the  beneficiary,  if  the  beneficiary  is  competent  to  act, 

1  Meeker  v.  Crawford,  5  Redf.  (N.  Y.)  450. 

2  Even  though  the  trust  itself  is  invalid.    Merry  v.  Pownall,  67 
L.  J.  Ch.  162;    (1898),  1   Ch.  306. 

8  Perrine  v.  Newell,  49  N.  J.  Eq.  58. 
*  Hanna  v.  Clark,  204  Pa.  St.  145. 

8  Woodard  v.  Wright,  82  Cal.  202;  Bradbury  v.  Birchmore,  117 
Mass.  569;  Dodds  v.  Tuke,  25  Ch.  Div.  617. 

6  Infra,  p.  39.     In  re  Pooley,  40  Ch.  Div.  1 ;  Evans  v.  Weatherhead, 
24  R.  I.  394. 

7  State  v.  Platt,  4  Harring.  154. 

8  Hazard  v.  Coyle,  26  R.  I.  361.     A  trustee  cannot  recover  for 
services  on  a  quantum  meruit. 

9  Taxes  paid  by  the  tenant  form  part  of  the  gross  income  on  which 
the  trustee  is  entitled  to  charge.    In  re  McCallum's  Estate,  211  Pa. 
St.  205. 

10  Barrell  u.  Joy,  16  Mass.  221. 


COMPENSATION  37 

and  no  undue  advantage  is  taken;  and  the  court  should 
take  the  agreement  into  consideration  in  fixing  the 
amount  of  compensation.1  Although  the  amount  to  be 
allowed  rests,  in  the  absence  of  provision  by  the  settle- 
ment or  statute,  in  the  sound  discretion  of  the  court,  the 
judgment  is  not  conclusive  on  persons  not  properly  par- 
ties to  the  case.2 

In  many  cases  a  commission  on  income  will  not  amount 
to  reasonable  compensation,8  and  in  such  cases  an  extra 
charge  will  be  allowed ; 4  and  in  cases  where  valuable  ser- 
vice has  been  rendered  to  the  principal  fund  over  and 
above  what  is  covered  by  the  ordinary  commission,  a 
charge  on  principal  will  be  allowed.5  The  ordinary 
changing  of  investments  is  not  usually  considered  to  be 
such  a  service,6  but  sometimes  a  commission  is  allowed,7 
and  even  where  it  is  a  case  of  extraordinary  trouble 
entitling  the  trustee  to  an  extra  charge,  the  court  will  not 
allow  compensation  by  way  of  commission,  in  these 
cases,  as  it  is  against  its  policy  to  encourage  frequent 
changes  and  excessive  expenditure;8  but  the  sale  and 
conversion  of  real  estate,  or  the  difficult  settlement  of  a 
large  claim,  are  usually  considered  extra  services.  The 
court  disallowed  a  commission  of  five  per  cent  for  war- 
ranting a  title.9  In  some  jurisdictions  the  trustee  will 
be  allowed  compensation  for  professional  services,  but  in 
other  jurisdictions  he  will  not.10 

A  cumulative  commission  is  never  allowed,  as  for  in- 

1  Bowker  v.  Pierce,  130  Mass.  262.    But  see  Barrett  v.  Hartley 
2  L.  B.  Eq.  789. 

2  Infra,  p.  94.    Jenkins  v.  Whyte,  62  Md.  427. 
8  Dixon  v.  Homer,  2  Met.  420. 

4  Turnbull  v.  Pomeroy,  140  Mass.  117. 

*  Ellis  v.  Ellis,  12  Pick.  178;  Pitney  v.  Everson,  15  Stew.  (N.  J.) 
361,  367  ;  Biddle's  Appeal,  83  Pa.  St.  340. 

6  Jenkins  v.  Whyte,  62  Md.  427. 

7  Rhode  Island  Hosp.  Trust  Co.  v.  Waterman,  23  R.  I.  342. 

8  Blake  v.  Pegram,  101  Mass.  592;  May  v.  May,  109  Mass.  252. 

9  Urann  v.  Coates,  117  Mass.  41.  10  Supra,  p.  34. 


38  COMPENSATION 

stance  a  commission  in  two  capacities,  such  as  guardian 
and  trustee,  for  the  management  of  the  same  fund,1  un- 
less there  was  a  complete  separation  of  duties,2  or  for 
collecting  and  disbursing  the  funds ;  but  the  commissions, 
however  and  on  whatever  charged,  must  not  amount  in  all 
to  more  than  reasonable  compensation  for  all  the  ser- 
vices.8 The  commission  should  be  deducted  from  cur- 
rent payments,  and  not  in  a  lump  on  the  termination  of 
the  trust ;  *  but  the  claim  for  a  commission  is  barred  by 
limitation  from  the  end,  not  the  beginning,  of  a  trust.5 

A  commission  of  one  to  two  and  one  half  per  cent  on 
the  personal  property  is  usually  allowed  on  paying  out  or 
distributing  the  trust  estate.6  No  commission  is  ordi- 
narily allowed  on  turning  over  the  estate  to  a  successor7 
or  on  real  estate  which  vests  in  the  remainderman  by  the 
force  of  the  original  instrument.8  When,  however,  a 
large  amount  of  the  personal  has  been  rightly  converted 
into  real  estate  by  payment  for  improvements  on  it,  a 
commission  may  be  allowed  on  that  amount.9  No  com- 

1  Brightly's  Pardon's  Dig.   Pa.  (1894),  p.   616,  §  239  ;    Meeker 
v.  Crawford,  5  Redf.  (N.  Y.)  452. 

2  Johnson  v.  Lawrence,  95  N.  Y.  154;  Blake  v.  Pegram,  101  Mass. 
592.     In  Daily  v.  Wright,  94  Md.  269,  a  trustee  who  owned  a  large 
amount  of  stock  in  a  corporation  took  a  large  salary  as  treasurer  of 
the  company  and  also  charged  a  commission  on  dividends,  and  it  was 
held  not  to  be  a  double  charge. 

8  Blake  v.  Pegram,  101  Mass.  592. 

4  Parker  v.  Ames,  121  Mass.  220;  Spencer  v.  Spencer,  38  App.  Div. 
(N.  Y.)  403 ;  In  re  Haskin,  98  N.  Y.  S.  926 ;  Conger  v.  Conger,  105  App. 
Div.  (N.  Y.)  589,  aff'd  185  N.  Y.  554.  But  this  rule  is  not  invariable. 
See  Lindsay  v.  Kirk,  95  Md.  50. 

6  Reese  v.  Meetze,  51  So.  Car.  333. 

«  More  v.  Calkins,  95  Cal.  435,  441 ;  Ga.  Code  (1895),  §  2552,  and 
§§  3484-3489 ;  Crocker's  Notes  on  Rev.  Laws  Mass.  483 ;  Gen.  Stat. 
N.  J.  (1895),  p.  2385,  §  125;  Manual  of  Wills,  Tucker,  pp.  120,  121 ; 
Biddle's  Appeal,  83.  Pa.  St.  340 ;  Smith  v.  Lansing,  53  N.  Y.  S.  633 ; 
In  re  Gill,  47  N.  Y.  S.  706. 

7  In  re  Todd,  64  App.  Div.  (N.  Y.)  435. 

8  Roosevelt  v.  Van  Allen,  31  App.  Div.  (N.  Y.)  1. 

9  Spencer  v.  Spencer,  38  App.  Div.  (N.  Y.)  403. 


COMPENSATION  39 

mission  is  allowed  on  assuming  the  trust.1  If  the  trustee 
has  been  unfaithful,  has  denied 2  or  mismanaged  his 
trust,  compensation  may  be  withheld,8  or  allowed  only 
to  the  extent  that  the  estate  has  benefited  by  his  ser- 
vices.4 But  under  a  statute  allowing  specified  com- 
missions, the  court  disclaimed  power  to  withhold  a 
commission  for  unfaithfulness.6 

Where  the  matter  of  commission  is  regulated  by  statute, 
or  the  court,  the  rate  prescribed  by  the  trust  instrument 
will  govern,6  as  the  statutes,  expressly  in  many  cases, 
and  impliedly  in  almost  all,  provide  that  the  provisions 
of  the  instrument  shall  govern;  and  this,  although  no 
exact  sum  is  specified.  As,  for  instance,  if  the  in- 
strument provides  for  "  reasonable  compensation,"  the 
amount  will  not  be  confined  to  the  statutory  rate.7 

The  rule  in  each  jurisdiction,  so  far  as  it  is  determined 
by  a  reported  decision  or  statute,  is  given  below.  Where 
no  authority  exists,  in  the  absence  of  actual  knowledge 
of  a  definite  practice  recognized  and  followed  in  the  lower 
courts,  it  is  usually  safe  to  follow  the  rules  laid  down  for 
executors  and  administrators,  mutatis  mutandis.8 

Alabama.  —  Reasonable  compensation.  Griffin  v.  Prin- 
gle,  56  Ala.  486;  5  per  cent  allowed  in  Pinckard's  Dis- 
tributees v.  Pinckard's  Adm'r,  24  Ala.  250. 

Alaska.  — No  authority.  Executors,  see  Code  of  Civil 
Procedure  (1900),  §  869. 

Arizona. — No  authority;  as  to  executors  and  admin- 
istrators, Revised  Statutes  (1901),  §  1853. 

1  Dixon  v.  Homer,  2  Met.  420. 

2  Stone  v.  Farnham,  22  R.  I.  227  ;  Hanna  v.  Clark,  204  Pa.  St.  145. 
8  Brooks  v.  Jackson,  125  Mass.  307. 

4  Jennison  v.  Hapgood,  10  Pick.  77. 
6  In  re  Fitzgerald,  57  Wis.  508. 

6  Southern  Ry.  Co.  v.  Glenn's  Ex'or,  98  Va.  309. 

7  E.  g.,  Civ.  Code  So.  Dak.  (1903),  §  1646,  and  statutes  passim; 
Parker  v.  Ames,  121  Mass.  220. 

8  Abell  v.  Brady,  79  Md.  94.    For  other  authorities  on  the  subject 
in  general,  see  Perry,  §  918,  n. 


40  COMPENSATION 

Arkansas.  —  Rate  provided  in  settlement,  and  enough 
to  make  reasonable  compensation,  Briscoe  v.  State,  23 
Ark.  592;  as  to  executors  and  administrators,  Digest 
of  Statutes  (1894),  §  134. 

California.  —  See  Civil  Code  (1903),  §§  2273,  2274, 
and  Supplement  to  Code  of  Civil  Procedure,  §  1618,  as 
amended  in  1905.  On  the  amount  of  estate  accounted 
for,  7  per  cent  up  to  $1,000;  5  per  cent  from  $1,000  to 
$10,000,  4  per  cent,  $10,000  to  $20,000;  3  per  cent, 
$20,000  to  $50,000 ;  2  per  cent,  $50,000  to  $100,000.  All 
over  $100,000,  one  half  of  one  per  cent,  and  such  further 
allowance  for  extra  services  as  court  may  allow,  not  ex- 
ceeding one  half  amount  allowed  by  statute. 

Trustee  under  a  will,  see  Code  of  Civil  Procedure 
(1903),  §  1700,  such  compensation  as  court  deems  reason- 
able. And  may  establish  a  yearly  allowance. 

Colorado.  —  No  authority.  As  to  executors,  Annotated 
Statutes  (1905),  §  4809. 

Connecticut.  —  Reasonable  compensation.  Clark  v. 
Platt,  30  Conn.  282 ;  Babcock  v.  Hubbard,  56  Conn.  284. 

Delaware.  —  Reasonable  compensation  in  discretion 
of  court  Laws  of  Delaware  (1893),  p.  712. 

Florida.  —  Reasonable  compensation.  Muscogee  Co. 
v.  Hyer,  18  Fla.  698. 

Georgia.  —  Code  (1895),  §  3168.  Same  commissions 
as  guardian;  §  3484,  2|  per  cent  on  both  income  and 
payments;  §  3487,  10  per  cent  on  proceeds  of  land 
worked;  §  3489,  extra  in  discretion  of  court;  §  2552,  on 
paying  over,  the  same  as  administrator. 

Hawaii.  —  Reasonable  compensation.  Hart  v.  Kapu, 
5  Hawaiian,  196,  200. 

Idaho.  —  No  authority.  Executors  and  administra- 
tors, Statutes  (1887),  §  5586. 

Illinois.  —  Reasonable  compensation.  Revised  Stats. 
(1905),  ch.  3,  §  136.  And  this  applies  to  trusts  es- 
tablished before  the  act.  Arnold  v*  Alden,  173  111. 
229. 


COMPENSATION  41 

Indiana.  —  Reasonable  compensation.  Premier  Steel 
Co.  v.  Yandes,  139  Ind.  307. 

Iowa. —  Reasonable  commissions.  In  re  Gloyd's  Est., 
93  Iowa,  303. 

Kansas.  —  No  authority. 

Kentucky.  —  Statutes  (1894),  §  3883,  not  to  exceed  5 
per  cent  on  amounts  received  and  distributed,  and  extra 
in  discretion  of  court  Fleming  v.  Wilson,  6  Bush,  610, 
allowed  1|  per  cent  yearly  on  amount  of  principal;  Ten 
Broeck  v.  Fidelity  Co.,  88  Ky.  242,  allowed  5  per  cent 
on  income,  and  \\  per  cent  on  investments.1 

Maine.  —  Revised  Statutes  (1903),  ch.  65,  §  37;  5  per 
cent  and  expenses. 

Maryland.  —  5  per  cent  on  income.  Abell  v.  Brady, 
79  Md.  94. 

Massachusetts. — Revised  Laws  (1902),  ch.  150,  §  14. 
Discretion  of  court;  general  rule,  5  per  cent  on  income. 
Barrell  v.  Joy,  16  Mass.  221;  May  v.  May,  109  Mass. 
252 ;  and  extras  earned. 

Michigan. — Compiled  Laws  (1897),  §  695.  Trustees 
appointed  by  Probate  Court,  same  compensation  as  ad- 
ministrators, §  9438.  Administrator,  on  all  personal 
estate  and  proceeds  of  real  estate  sold.  First  $1,000, 
5  per  cent;  $1,000  to  $5,000,  2£  per  cent;  all  above,  1  per 
cent. 

Minnesota.  —  No  authority ;  but  executors,  administra- 
tors, and  guardians  are  allowed,  and  presumably  trustees, 
such  reasonable  compensation  as  court  decrees  just.  Re- 
vised Laws  (1905),  §  3707. 

Mississippi.  —  Reasonable  compensation.  Shirley  v. 
Sbattuck,  28  Miss.  13. 

Missouri.  —  Reasonable  compensation.  Kemp  v.  Fos- 
ter, 22  Mo.  App.  643. 

Montana.  —  Civil  Code  (1895),  §  3301,  reasonable 
compensation.  Code  Civil  Procedure,  §  2776.  For  first 

1  See  also  Central  Trust  Co.  v.  Johnson,  25  Ky.  Law  Rep.  55. 


42  COMPENSATION 

$1,000,  7  per  cent;  all  between  $1,000  and  $10,000,  5  per 
cent;  between  $10,000  and  $20,000,  4  per  cent;  all  above 
$20,000,2  per  cent;  extra  not  to  exceed  amount  allowed 
by  statute. 

Nebraska.  —  Reasonable  compensation.  Olson  v. 
Lamb,  56  Neb.  104,  118. 

Nevada. —  No  authority.  For  executors,  see  Compiled 
Laws  (1900),  §  2969. 

Neiv  Hampshire.  —  Gordon  v.  West,  8  N.  H.  444, 
trustee  allowed  1  per  cent  on  principal,  rate  of  income 
being  6  per  cent.  Practice  is  5  per  cent  on  income. 
Tuttle  v.  Robinson,  33  N.  H.  104,  118. 

New  Jersey.—  General  Statutes  (1895),  p.  2380,  §§  109, 
110.  Actual  value,  p.  2402,  §  204.  Reasonable  com- 
pensation not  exceeding  5  per  cent  on  income. 

New  Mexico.  —  No  authority.  For  executors,  see 
Compiled  Laws  (1897),  §  1972. 

New  York.  —Code of  Procedure  (1902),  §§  2730,  2802, 
and  3320,  as  amended  by  Laws  of  1904,  p.  1921,  ch.  755. 
Allowed  5  per  cent  up  to  $1,000;  $1,000  to  $10,000,  2| 
per  cent;  for  all  above  $11,000,  1  per  cent.1 

North  Carolina.  —  Reasonable  commission  not  exceed- 
ing 5  per  cent.  Sherrill  v.  Shuford,  6  Ired.  Eq.  228. 

North  Dakota.  —  Revised  Code  (1895),  §  4293,  same 
as  executors.  §  6492,  for  first  $1,000,  5  per  cent;  $1 ,000 
to  $5,000,  4  per  cent.  All  above,  2|  per  cent. 

Ohio.  —  Revised  Statutes  (1890),  §  6333;  reasonable 
compensation. 

Oklahoma.  —  No  authority.  Statutes  (1903),  §  1719,  as 
to  executors. 

Oregon.  —  No  authority.  Executors,  Annotated  Laws 
(1901),  §  1209. 

Pennsylvania. — Brightly's  Purdon's  Digest  (1894), 
p.  2031,  §  29;  reasonable  compensation;  5  per  cent  rea- 


1  Trustee  who  has  collected  bnt  not  paid  out  is  entitled  to  half 
commission.     In  re  Todd,  64  App.  Div.  (N.  Y.)  435. 


COMPENSATION  43 

sonable,  Pusey  v.  Clemson,  9  Serg.  &  R.  204;  Davis's 
Appeal,  100  Pa.  St.  201. 

Rhode  Island.  —  No  authority.  Executors,  General 
Laws  (1896),  ch.  219,  §  8. 

South  Carolina.  — Code  (1902),  vol.  1,  §  2590,  same  as 
executors;  §  2560,  executors  allowed  not  exceeding  10 
per  cent.  Court  has  no  discretion.  Cobb  v.  Fant,  36 
So.  Car.  1. 

South  Dakota. —Civil  Code  (1903),  §  1646.  Same  as 
executors,  if  trust  instrument  silent.  If  rate  not  speci- 
fied in  trust  instrument,  reasonable  compensation.  Ex- 
ecutors, 5  per  cent  on  collections  up  to  $1,000;  4 
per  cent  between  $1,000  and  $5,000;  2|  per  cent  on 
all  above  $5,000.  Judge  of  probate  may  make  allow- 
ance for  extraordinary  services.  Probate  Code  (1903), 
§271. 

Tennessee.  —  Code  (1896),  §  3525.  Same  as  clerks  and 
masters,  not  exceeding  5  per  cent,  §  6388.  Clerks  and 
masters'  fees  defined. 

Texas.  —  Reasonable  compensation.  Harris  v.  First 
National  Bank,  45  S.  W.  311  (1898.  Texas  Civil  Ap- 
peals). 

Utah.  —  Reasonable  compensation.  Revised  Statutes 
(1898),  §  3978. 

Vermont.  —  Reasonable  compensation.  Hubbard  v. 
Fisher,  25  Vt.  539. 

Virginia.  —  Code  (1904),  §  2695.  Reasonable  commis- 
sion on  receipts  or  otherwise.  Usually  5  per  cent.  Boyd 
v.  Oglesby,  23  Gratt.  674,  688. 

Washington.  —  No  authority.  Executors,  Code  (1897), 
§  6314. 

West  Virginia. —Code  (1906),  §  3309.  Reasonable 
compensation.  Usual  5  per  cent.  Hoke  v.  Hoke,  12  W. 
Va.  427.  10  percent  allowed  for  extraordinary  services. 
Shepherd  v.  Hammond,  3  W.  Va.  484. 

Wisconsin.  —  No  authority.  Executors,  Annotated 
Statutes  (1898),  §§  3992,  3993. 


44  THE  TRUSTEE'S  ESTATE 

Wyoming.  —  No  authority.  Executors,  Revised  Stat- 
utes (1899),  §  4712. 

The  Trustee's  Estate.  —  The  trustee  takes  an  absolute 
estate  in  personal  property ; l  but  in  real  estate  he  will 
take  a  large  enough  estate  to  administer  the  trusts  and 
no  larger,  entirely  irrespective  of  the  use  or  absence  of 
words  of  limitation,  or  the  technical  phraseology  of  the 
trust  instrument.2 

Thus  where  the  estate  is  granted  without  words  of  limi- 
tation, but  a  power  of  sale  is  given  to  the  trustee,  he 
will  take  an  estate  in  fee  instead  of  a  mere  life  estate,8 
since  without  a  fee  he  could  not  exercise  his  power;  but 
no  larger  estate  is  given  than  is  absolutely  necessary,  as, 
for  instance,  a  life  estate  being  sufficient  to  support  an 
annuity,  no  larger  estate  will  be  implied.4 

Although  a  fee  be  given  to  the  trustee  to  support  a 
less  estate,  as  e.  g.  for  the  benefit  of  A  until  B  comes  of 
age,  the  estate  will  vest  in  B  when  he  comes  of  age  irre- 
spective of  the  trustee's  fee; 6  and  there  is  often  statutory 
provision  that  the  estate  of  the  trustee  shall  terminate  on 
the  completion  of  the  purposes  of  the  trust.6 

In  some  Code  States,  namely,  New  York,  Michigan,  "Wis- 
consin, Minnesota,  and  South  Dakota,7  the  trusts  not  ex- 

1  Pace  v.  Pierce,  49  Mo.  393.     See  infra,  p.  102. 

2  Cleveland  v.  Hallett,  6  Cush.  403 ;  Packard  v.  Old  Colony  Rail- 
road Co.,  168  Mass.  92,  p.  96;  Greenwood  v.  Coleman,  34  Ala.   150; 
King  v.  Parker,  9  Cush.  71 ;  Smith  v.  Proctor,  139  N.  C.  314. 

8  Bagshaw  v.  Spencer,  1  Ves.  Sen.  142  ;  Welch  v.  Allen,  21  Wend. 
147. 

4  Norton  v.  Norton,  2  Sand.  296;  Code  Ga.  (1895),  §  3191 ;  Green- 
wood v.  Coleman,  34  Ala.  150. 

5  Slevin  v.  Brown,  32  Mo.  176;  Nash  v.  Coates,  3  B.  &  Adol.  839; 
Ga.  Code  (1895),  §  3191. 

6  N.  Y.  Rev.  Stat.  (1901)  p.  3030,  §  89  ;  Mich.,  Wise.,  Minn.,  Cal., 
So.  Dak.  Rev.  Civ.  Code. 

7  Rev.  Stat.  N.  Y.  (1901),  p.  3026,  §§  77,  78;  Annot.  Stat.  Mich. 
(1882),    §8843;    Rev.  Laws   Minn.    (1905),  §  3250  ;>  Wise.   Statute 


POSSESSION — TRUSTEE'S  ESTATE  is  JOINT         45 

pressly  established  by  statute  are  cut  down  to  a  mere 
power  and  no  title  vests  in  the  trustee. 

A  passive  trustee  (that  is,  a  trustee  who  merely  holds  a 
naked  title  to  permit  another  to  do  something,  as,  e.  g., 
collect  the  rents)  takes  a  modified  title,  about  which  we 
need  not  concern  ourselves,  as  such  trusts  are  not  within 
the  scope  of  this  treatise. 

Possession.  —  At  law  the  trustee  is  entitled  to  the  pos- 
session of  the  real  estate,1  and  may  eject  the  beneficiary,2 
nor  can  the  beneficiary  deny  the  trustee's  title  if  he  is  his 
landlord.8  He  is  equally  entitled  to  the  possession  of  the 
personal  property ; 4  but  the  beneficiary  may  have  an  equi- 
table right  to  possession  and  will  receive  it  under  those 
circumstances,6  though  even  then  at  law  his  possession 
will  technically  be  the  possession  of  the  trustee.  If  he 
buys  in  a  tax  title,  he  cannot  hold  it  against  the  trustee.8 

Trustee's  Estate  is  Joint.  —  Trustees,  where  there  are 
more  than  one,  take  a  joint  estate  which  is  not  subject  to 
partition.7  If  one  trustee  conveys  his  part  without  join- 
ing the  others  the  conveyance  is  void,  and  the  grantee 
does  not  take  an  undivided  estate  in  the  premises;  no 
title  passes.8 

(1899),  §  2084;  Rev.  Civ.  Code,  So.  Dak.  (1903),  §310;  Seidelbach  v. 
Knaggs,  44  App.  Div.  (N.  Y.)  169 ;  Staats  v.  Storm,  76  App.  Div. 
(N,  Y.)  627. 

i  Clark  v.  Clark,  8  Paige,  153 ;  Beach  v.  Beach,  14  Vt.  28. 

a  Presley  v.  Stribling,  24  Miss.  527. 

8  White  v.  Albertson,  3  Dev.  241. 

*  Pace  v.  Pierce,  49  Mo.  393 ;  Western  Railroad  Co.  v.  Nolan,  48 
N.  Y.  513. 

6  Infra,  pp.  100,  175. 

6  Frierson  v.  Branch,  30  Ark.  453. 

'  Attorney  General  v.  Gleg,  1  Atk.  356 ;  Burns's  Annot.  Ind.  Stat. 
(1901),  §3342;  Rev.  Stat.  N.  J.  (1895),  p.  3685,  §  7. 

8  Chapin  v.  First  Univ.  Soc.,  8  Gray,  580;  Learned  v.  Welton,  40 
Cal.  349;  Sinclair  v.  Jackson,  8  Cow.  543;  Morville  v.  Fowle,  144 
Mass.  109;  but  see,  contra,  Perry,  §  334,  and  Boursot  v.  Savage,  L.  R. 
2  Eq.  134. 


46        TRUSTEE'S  ESTATE  is  JOINT — ALIENATION 

All  the  trustees  are  equally  seised,  and  on  the  death  of 
one  the  whole  estate  vests  in  the  survivors.1  A  provision 
in  the  trust  instrument  for  keeping  up  the  number  of  the 
trustees  will  not  prevent  survivorship ; 2  and  the  statutes 
in  many  States  providing  that  joint  tenancies  shall  be 
construed  as  tenancies  in  common  do  not  apply  to  trus- 
tees' estates.8 

Transmission  of  the  Trustee's  Estate.  —  The  trustee, 
being  the  legal  owner,  may  make  conveyance,  and  his 
transferee  will  stand  at  law  entitled  in  his  place.4  But 
if  the  trustee  had  no  power  given  him  to  convey,  his 
transferee  would  take  no  larger  title  than  the  trustee  con- 
veyed, and  would  be  bound  by  the  trusts  his  grantor  was 
bound  by. 

In  the  Code  States  the  trustee  having  no  estate,  but  a 
power  merely,  the  conveyance  would  be  simply  void,  and 
no  estate  would  pass;  and  there  is  a  similar  statutory 
provision  in  Indiana.6 

Alienation.  —  If  the  trustee  transfers  his  estate  to  a 
purchaser  for  value  without  notice  of  the  trust,  the  pur- 
chaser will  acquire  the  title  discharged  of  the  trust.6 
This  is  universal  law,  but  is  often  enacted  by  statute.7 

1  Co.  Lit.  113;  Ames,  346,  n. 

2  Shook  v.  Shook,  19  Barb.  653;  Dixon  v.  Homer,  12  Cush.  41 ; 
Norris  v.  Hall,  124  Mich.  170. 

8  Underbill,  382,  n. 

*  Canoy  v.  Troutman,  7  Ired.  155. 

5  Rev.  Stat.  N.  Y.  (1901),  p.  3028,  §  85;  Burns's  Annot.  Ind.  Stat., 
(1901),  §  3395;  Comp.  Laws,  Mich.  (1897),  §  8849;  Wise.  Stat.  (1899): 
§  2091 ;  Gen.  Stat.  Kan'.-(1897),  ch.  113,  §  5  ;  N.  Dak.  Civ.  Code  (1895), 
§  3400  ;  Rev.  Civ.  Code  So.  Dak.  (1903),  §317  ;  Rev.  Stat.  Okla.  (1903), 
§4096;  Rev.   Stat.  Minn.   (1905),  §  3259 ;   Staats  v.  Storm,   76  App. 
Div.  (N.  Y.)  627. 

6  Perry,  §§  217  et  seq. ;  Ames,  286,  n.,  has  a  full  discussion  of  au- 
thorities.    See  also  infra,  p.  1 79. 

7  Rev.  Stat.  N.  Y.  (1901),  p.  3028,  §§  84,  85  ;  Comp.  Laws  Mich, 
( 1897),  §  8838;  Wise.  Stat.  (1899),  §  2080;  Civil  Code  Calif.  (1903), 
§  856;  N.  Dak.  Code  (1895),  §  3387;  Rev.  Stat.  Okla.  (1903),§  4083; 


ALIENATION  47 

In  some  jurisdictions  an  attaching  creditor  is  on  the 
same  footing  as  a  purchaser  for  value ; 1  but  if  the  prop- 
erty were  transferred  to  secure  a  pre-existing  debt,  the 
transferee  is  not  a  purchaser  for  value. 

If  the  purchaser  has  reason  to  believe  that  the  prop» 
erty  is  held  in  trust,  and  fails  to  make  proper  inquiries, 
he  is  not  a  purchaser  without  notice;  and  the  word  "  trus- 
tee "  occurring  on  the  face  of  the  deed  or  certificate  is 
sufficient  to  put  him  to  his  inquiry  as  to  the  trustee's 
power  to  transfer  the  property.2 

If  a  purchaser  has  once  acquired  a  good  title,  he  may 
transfer  a  good  title  to  any  one  but  the  person  who  de- 
frauded the  trust  in  the  first  place ;  and  even  he  may  hold 
title  if  he  takes  it  as  trustee  in  another  trust.8 

If  the  trustee  have  the  power  to  transfer,  his  transferee 
will  take  a  good  title  unless  he  knows  that  the  transfer  is 
a  breach  of  trust;  but  the  fact  that  the  consideration  is 
inadequate,  or  that  it  goes  elsewhere  than  to  the  trust 
estate,  will  be  sufficient  notice  of  fraud  to  invalidate  the 
title.4 

No  title  to  trust  property  will  pass  by  a  general  as- 
signment, as  the  trustee  will  not  be  supposed  to  intend  to 
commit  a  breach  of  trust,  and  the  deed  will  not  be  so 
construed  as  to  make  him  do  so.6 

Where  the  trustee  was  one  of  the  beneficiaries  as  well 
as  trustee,  it  was  said  that  the  legal  title  would  pass  sub- 


Burns's  Annot.  Ind.  Stat.  (1901),  §  3392;  Gen.  Stat.  Kan.  (1897),  ch. 
113,  §  2;  Rev.  Stat.  Me.  (1903),  ch.  75,  §  15;  Ala.  Code  (1896), 
§  1042;  Rev.  Laws  Minn.  (1905),  §  3248. 

1  Mass.  Rev.  Laws  (1902),  ch.  147,  §3. 

2  Smith  v.  Burgess,  133  Mass.  511;  Shaw  v.  Spencer,   100  Mass. 
382 ;  Third  Nat.  Bk.  v.  Lange,  51  Md.  138 ;  Ford  v.  Brown,  114  Tenn. 
467  ;  s.  c.  1  L.  R.  A.  N.  s.  188  and  note.    See  Rua  v.  Watson,  13  So. 
Dak.  453,  for  decision  to  contrary.     Infra,  p.  1 50. 

8  Meldon  v.  Devlin,  31  App.  Div.  (N.  Y.)  146. 
*  Wormeley  v.  Wormeley,  1  Brock.  U.  S.  Cir.  Ct.  330. 
5  Thomson  v.  Peake,  17  S.  E.  45;  Rogers  v.  Chase,  56  N.  W.  537; 
Abbott,  Adm'r,  Pet'r,  55  Me.  580. 


48  ALIENATION 

ject  to  the  execution  of  the  trusts,  but  the  better  opinion 
seems  to  be  that  it  will  not.1 

No  title  will  pass  to  the  trustee's  assignee  in  bank- 
ruptcy or  insolvency;2  nor  can  the  trust  property  be 
taken  for  the  trustee's  private  debt.3 

If  the  creditor  levies  with  notice  of  the  trust,  he  will 
take  title  subject  to  the  trust; 4  but  if  he  attaches  in  some 
States  without  any  notice,  he  will  stand  in  the  position  of 
a  bonafide  purchaser.5 

The  trust  property  may  be  taken  on  execution  for  debts 
incurred  by  the  trustee  in  the  execution  of  his  trusts,  in 
all  jurisdictions  to  the  extent  to  which  the  trustee  is  en- 
titled to  reimbursement,  and  in  some  without  regard  to 
his  claim.6  That  is  to  say,  in  most  jurisdictions  the 
creditor  takes  only  by  subrogation  through  the  trustee, 
and  so  is  liable  to  all  the  set-offs  which  the  trustee  would 
be ;  as,  for  instance,  if  the  trustee  were  in  default,  the 
creditor  would  only  take  the  amount  due,  less  the 
default.7 

If,  however,  the  trustee  were  given  the  powers  of  a 
general  agent  by  statute  or  by  the  trust  instrument, — as, 
for  instance,  where  he  is  authorized  to  carry  on  the  tes- 
tator's business, —  the  liability  would  bind  the  trust  estate 

1  Doe  d.  Raikes  v.  Anderson,  1  Starkie,  1 55 ;  Fausset  v.  Carpenter, 
2  Dow  &  Clark,  232  ;  in  re  Kembles's  Estate,  201  Pa.  523. 

2  Ames,  393,  n.  8  Supra,  pp.  16,  17. 

4  Warren  v.  Ireland,  29  Me.  62 ;  Houghton  v.  Davenport,  74  Me. 
590. 

6  Supra^  p.  47.  In  Beck  Lumber  Co.  P.  Hupp,  188  111.  562,  B  took 
conveyance  on  a  secret  oral  trust,  which  he  executed  by  giving  a  deed ; 
before  this  was  recorded  his  creditors  attached,  but  took  nothing. 

6  15  Amer.  Law  Rev.  449 ;  Wylly  v.  Collins,  9  Ga.  223 ;  Mander- 
son's  Appeal,  113  Pa.  631 ;  Sanders  v.  Houston  Guano  &  Warehouse 
Co.,  107  Ga.  49. 

7  Strickland  v.  Symons,  26  Ch.  Div.  245  ;  Dowse  v.  Gorton,  40  Ch. 
Div.  536 ;  Ames,  423,  n. ;  Mason  v.  Pomeroy,  151  Mass.  164 ;  Mayo  v. 
Moritz,   151    Mass.  164;  Norton  v.  Phelps,  54  Miss.  467;  Ga.  Code 
(1895),  §  3185.     Supra,  p.  28. 


ALIENATION — SET-OFF  49 

to  the  extent  of  his  authority ;  but  even  then  it  is  held 
that  the  creditor  must  come  against  the  trustee  first.1 

The  court  has  held  in  Mississippi,2  and  it  is  provided 
by  statute  in  Alabama,8  that  where  the  trustee  is  dead,  in- 
solvent, or  out  of  the  court's  jurisdiction,  the  creditor 
may  proceed  against  the  trust  property  direct. 

A  mechanic's  lien  will  attach  to  a  trust  estate  only 
where  the  trustee  has  the  power  to  contract  for  the  labor 
for  which  recovery  is  sought,4  and  is  not  forbidden  to 
encumber  the  estate  by  the  trust  instrument.6 

Set-off. — The  trustee's  private  creditor  might  set  off 
his  debt  in  a  suit  at  law,  unless  he  knew  at  the  time  of  its 
creation  that  the  claim  was  a  trust  claim,  in  which  case 
he  will  be  enjoined  from  doing  so  in  equity;6  but  if  he 
were  ignorant  of  the  trust  relationship,  he  may  keep  his 
set-off.7 

The  trustee's  private  creditor  has  no  set-off  in  equity, 
bankruptcy,  or  insolvency. 

A  creditor  of  the  beneficiary  may  set  off  his  debt  in 
equity  or  in  an  action  at  law  by  the  trustee  as  an  equi- 
table bar  in  most  jurisdictions.8 

The  trustee  can  set  off,  against  third  persons,  only  such 
debts  as  his  beneficiary  could  set  off,  and  in  equity  can 
set  off  the  debts  of  the  beneficiary.9 

The  trustee  has  a  set-off  against  the  beneficiary  for 
debts  due  him  from  the  trust  estate,10  or  for  any  amounts 

1  Fairland  v.  Percy,  L.  R.  3  Prob.  &  Div.  217. 

2  Norton  v.  Phelps,  54  Miss.  467.  8  Stat.  Ala.  (1896),  §  4183. 
*  Meyers  v.  Bennett,  7  Daly  (N.  Y.),  471. 

6  Franklin  Savings  Bank  v.  Taylor,  131  111.  376. 

6  Nat.  Bk.  v.  Ins.  Co.,  104  U.  S.  54. 

7  School  Dist.  v.  First  Bank,  102  Mass.  174. 

8  Ames,  270,  n. ;  but  see  Walker  v.  Brooks,  125  Mass.  241. 

9  Walker  v.  Brooks,  125  Mass.  241 ;  Rev.  Stat.  Me.  (1903),  ch.  84, 
§  77;  Rev.  Laws  Mass.  (1902),  ch.  174,  §§5,   6  ;  Wise.  Stat.  (1899) 
§  4260. 

10  Woodard  v.  Wright,  82  Cal.  202 ;  Bradbury  v.  Birchmore,  117 
Mass.  569  ;  Dodds  v.  Tuke,  25  Ch.  Div.  617  ;  Merry  v.  Pownall,  1  Ch. 
(1898)  306.  Infra,  p.  184. 

4 


50  TITLE   PASSES   TO    REMAINDERMAN 

due  him  from  the  beneficiary  as  beneficiary ;  but  he  can- 
not retain  the  trust  property  to  liquidate  a  debt  due  from 
the  beneficiary  in  another  capacity,  as,  for  instance,  a 
professional  fee1  or  personal  loan.2 

In  equity  the  defendant  may  set  off  a  debt  due  a  third 
person  as  trustee  for  the  defendant,  and  is  generally  en- 
titled to  such  set-off  as  an  equitable  plea.8 

Title  passes  to  Remainderman  though  his  Estate  be 
only  Equitable.  —  Where  the  trustee's  estate  is  reduced 
to  a  mere  power  by  statute,4  or  where  a  life  estate  only 
was  necessary  to  execute  the  trusts,  the  trust  estate  will 
pass  out  of  the  trustee's  hands,  and  vest  in  the  remain- 
derman, even  though  he  have  an  equitable  estate  only, 
when  the  purposes  of  the  trust  are  accomplished,  and  the 
intervention  of  the  trustee  will  not  be  necessary  to  per- 
fect the  title.6  But  in  the  absence  of  statute,  where  the 
trustee  has  taken  a  fee,  a  conveyance  by  the  trustee  is 
necessary.6 

On  the  resignation  or  disability  of  a  trustee  the  title 
to  the  property  may  vest  in  the  successor  by  conveyance 
of  the  outgoing  trustee,  or  where  there  is  a  statute  au- 
thorizing it  the  court  may  appoint  a  person  to  convey  the 
estates,  if  he  be  beyond  the  jurisdiction.  In  the  absence 
of  such  statute  there  is  no  way  of  divesting  the  outgoing 
trustee's  title  save  by  act  of  the  legislature.  Such  acts 
are  not  unconstitutional,  as  the  estate  taken  is  not  bene- 
ficial to  the  trustee.7 

1  Harris  v.  Elliot,  24  App.  Div.  (N.  Y.)  133. 

2  Abbott  v.  Foote,  146  Mass.  333 ;  Dodd  v.  Winship,  133  Mass.  359 ; 
but  the  set-off  was  allowed  in  Smith  v.  Perry,  197  Mo.  438. 

8  Ames,  270,  n. 

4  Stats,  in  New  York,  Michigan,  Wisconsin,   &c.     Supra,  pp.  44, 
45. 

5  Morgan  v.  Moore,  3  Gray,  319  ;  Cherry  v.  Richardson,  24  S.  Rep. 
570  (Ala.  1898)  ;  Temple  v.  Ferguson,  110  Tenn.  84. 

6  Packard  v.  Marshall,  138  Mass.  301 ;  Davidson  v.  Janes,  30  Misc. 
Rep.  (N.  Y.)  156.     Infra,  p.  119. 

7  Supra,  pp.  11,  12.    Marshall  v.  Kraak,  23  App.  D.  C.  129. 


TRANSMISSION  —  ON   DEATH   OF   TRUSTEE  51 

Transmission.  Forfeiture.  —  Forfeiture  of  the  trustee's 
property  formerly  carried  with  it  a  forfeiture  of  the  trust 
property,  although  the  Crown  took  subject  to  the  trust;1 
but  now  there  is  no  forfeiture  in  equity,  and  it  is  gener- 
ally provided  by  statute  that  there  shall  be  neither  for- 
feiture nor  escheat. 

Transmission  on  Death  of  Trustee.  —  When  one  of  sev- 
eral trustees  dies,  both  the  office  and  the  title  to  the  es- 
tate vest  in  his  co-trustees  by  survivorship;2  and  when  a 
sole  trustee  dies,  it  is  generally  provided  by  statute  that 
the  property  and  office  shall  vest  in  his  successor  in  the 
trust,  the  title  in  the  meanwhile  remaining  in  the  court  or 
his  heirs  and  personal  representatives,8 

Aside  from  statute,  on  the  death  of  a  sole  trustee  tes- 
tate the  property  will  pass  to  his  general  devisee  in  the 
absence  of  intent  to  confine  the  disposition  of  property  to 
that  in  which  he  had  a 'beneficial  interest;  but  it  will  not 
pass  to  a  general  devisee  where  such  an  intention  would 
be  negatived  by  the  circumstances;  as,  for  instance, 
where  the  general  devisee  is  a  class  of  persons,  or  where 
the  general  devisee  is  a  minor,  or  otherwise  incapable  or 
unfit.  In  such  case  the  property  will  descend  to  the  heir 
as  unde vised  estate. 

If  the  sole  trustee  dies  intestate,  the  property  will  de- 
scend to  his  representative ; 4  but  a  widow  has  no  dower,5 
and  a  husband  no  curtesy  in  a  trust  estate.6  Or  in  some 
jurisdictions  the  title  to  real  estate  vests  in  the  court 7  or 


1  King  v.  Mildmay,  5  Barn.  &  Ad.  254. 

2  Supra,  p.  46  :  Shook  v.  Shook,  19  Barb.  653. 

8  As  to  survival  of  office,  see  survival  of  powers,  infra,  p.  54. 
4  Schenck  v.  Schenck,  16  N.  J.  Eq.  174  ;  Talbot  i;.  Leatherbury,  92 
Md.  166. 

*  Gen.  Stat.  N.  J.  (1895),  p.  1280,  §  25. 

6  Flint,  §  125 ;  Perry,  §§  321,  322. 

7  New  York,  Michigan,  Wisconsin,  Alabama, and  Missouri;  Perry 
§341. 


52  WHAT  POWERS  A   TRUSTEE   HAS 

eldest  son  by  statute.1    In  some  jurisdictions  they  may 
disclaim.2 

When  the  title  to  an  estate  vests  in  the  devisee,  heir, 
or  personal  representative  of  a  trustee,  the  devisee  or  per- 
sonal representative  only  holds  the  title  until  such  time  as 
a  successor  may  be  appointed ; 8  he  does  not  succeed  to 
the  office,  but  to  the  title  only,4  and  he  has  power  to  ex- 
ecute the  trust  only  so  far  as  is  necessary  to  preserve  it,6 
and  to  make  it  over  to  the  new  trustee,  and  make  up  an 
account.  It  is  entirely  inappropriate  for  him  to  attempt 
to  carry  on  the  trust,  and  in  many  jurisdictions  it  is 
expressly  provided  that  he  takes  no  estate.6 

II.  POWERS. 

Of  Powers  in  General.  —  It  does  not  come  within  the 
scope  of  this  treatise  to  consider  the  powers  which  a 
trustee  may  have  collateral  to  the  trust  estate,  whether 
they  are  to  be  exercised  over  the  trust  property  or  else- 
where. As,  for  instance,  a  power  to  distribute  the  trust 
property  among  a  certain  class  of  persons,  and  appor- 
tion the  shares  among  beneficiaries,  such  as  children  or 
charities. 

We  need  only  concern  ourselves  with  those  powers 
which  the  trustee  must,  or  ordinarily  does  have,  in  con- 
nection with  the  management  of  the  trust  property. 

What  Powers  a  Trustee  has.  —  At  common  law  a  trus- 
tee, being  the  absolute  legal  owner  of  the  property,  could 

1  Pub.  Gen.  Laws  Md.  (1904),  Art.  46,  §  24. 

2  Perry,  §  344 ;  Mass.  Rev.  Laws  (1902),  ch.  147,  §  13. 

8  Stevens  v.  Austen,  7  Jur.  N.  s.  873 ;  Harlow  v.  Cowdrey,  10S 
Mass.  183. 

4  Mortimer  v.  Ireland,  11  Jurist,  721.  Infra,  p.  54.  But  other- 
wise in  some  States,  where  personal  representatives  succeed  to  trust 
West  Va.  Code  (1906),  §  4001. 

6  De  Peyster  v.  Ferrers,  11  Paige,  13. 

6  Perry,  §  344  ;  Code  Ala.  (1896),  §  1044. 


WHAT  POWERS  A   TRUSTEE   HAS  53 

exercise  all  the  ordinary  powers  which  an  absolute  owner 
might,  but  in  a  court  of  equity  the  rights  of  the  bene- 
ficiary are  paramount,  and  consequently  a  trustee  will  be 
restrained  from  exercising  any  power  inconsistent  with 
the  beneficiary's  rights;  hence  a  trustee  may  be  said  to 
have  only  those  powers  which  he  will  not  be  restrained 
from  using. 

The  trustee  retains  in  equity  as  incidental  to  his  office 
certain  of  the  powers  which  are  his  at  law  as  owner  of 
the  property ;  he  has  also  those  additional  powers  which 
are  conferred  by  the  legislature  or  the  court,  and  those 
powers  which  are  conferred  by  the  trust  instrument. 

The  general  powers  incidental  to  the  office  are  limited 
to  and  comprise  all  those  that  are  necessary  to  the  per- 
formance of  his  duties,  such  as  power  to  demand,  receive, 
and  sue  for  the  trust  property  or  any  income  accruing  on 
it;  to  invest  the  funds  and  lease  the  real  estate;  to  take 
proper  measures  to  keep  the  real  estate  repaired  and  in- 
sured, and  to  defend  suits  against  him  in  respect  to  the 
property,  or  against  him  as  trustee ;  to  disburse  and  dis- 
tribute the  property;  to  protect  the  beneficiary,  or  main- 
tain him  if  incapable  of  maintaining  himself. 

The  powers  to  sell  the  trust  property,  and  to  change 
investments,  and  to  convert  real  into  personal  estate  and 
vice  versa,  are  usually  bestowed  on  the  trustee  by  the 
legislature  or  court,  but  are  special,  and  not  general  and 
incidental  to  the  office,  since  the  original  conception  of  a 
trustee  was  some  one  to  be  trusted  with  the  title  to  the 
property,  and  not  a  sort  of  business  manager,  as  the 
office  has  more  and  more  become. 

The  trust  instrument  itself  may,  and  usually  does,  con- 
fer in  express  terms  the  powers  which  the  court  or  legis- 
lature gives;  and  it  usually  enlarges  the  general  powers 
incidental  to  the  office.  In  addition  it  frequently  gives 
other  powers  of  a  discretionary  character,  such  as  a  power 
of  revocation  of  the  trust,  or  a  power  of  appointment  as  to 
distribution  of  income. 


54  VESTING   OP  POWERS 

Implied  powers  are  also  often  given  by  the  trust  in- 
strument where  it  places  a  duty  on  the  trustee,  and  neg- 
lects to  give  expressly  the  powers  to  perform  it ;  and  in 
every  such  case  the  trustee  will  take  by  implication  all 
the  powers  necessary  to  execute  his  duty.1  As,  for  in- 
stance, where  a  trustee  is  to  borrow  money  on  mortgage, 
he  may  give  a  mortgage  containing  a  power  of  sale,2  or 
where  he  is  to  keep  the  estate  safely  invested  he  will  have 
implied  power  to  sell  hazardous  investments  left  by  the 
maker  of  the  trust. 

Vesting  of  Powers.  —  There  are  some  cases  in  which 
the  powers  incidental  to  the  office  do  not  vest  in  the 
holder  of  the  title.  For  instance,  where  the  ownership 
vests  in  the  heir  or  personal  representative  of  a  sole 
trustee,  or  in  a  stranger  by  a  conveyance  not  properly 
authorized.  In  such  cases  the  owner  will  be  a  trustee,  but 
will  not  have  the  usual  incidental  powers  to  manage  the 
estate ;  but  only  such  powers  as  are  necessary  to  preserve 
the  property  until  it  can  be  conveyed  to  a  properly  con- 
stituted trustee.8 

The  powers  will  vest  in  a  trustee  properly  appointed, 
and,  if  there  is  more  than  one  trustee,  in  all  the  trustees 
jointly. 

The  general  powers  will  pass  to  the  survivors  or  survi- 
vor, and  will  vest  in  the  successors  in  the  trust;4  and  this 
notwithstanding  a  provision  for  the  keeping  up  of  the 
number  of  the  trustees.6  Special  powers  conferred  by 
the  trust  instrument  upon  the  trustees  in  that  capacity 
will  pass  to  survivors  and  successors.6 

The  old  law  was  that  special  powers  limited  to  "  my 
trustees  "  or  "  my  trustees  A  &  B  "  did  not  pass  with  the 

1  Infra,  pp.  65,  66.         2  Infra,  p.  72.  8  Supra,  p.  52. 

4  Webster  v.  Vandeventer,  6  Gray,  428;  Belmont  v.  O'Brien,  12 
N.  Y.  394;  Nugent  v.  Cloon,  117  Mass.  219.     Statutes  in  many  juris- 
dictions to  same  effect. 

5  Hammond  v.  Granger,  128  Mass.  272  ;  Bailey,  Pet'r,  15  R.  I.  60. 

6  Wemyss  v.  White,  159  Mass.  484 ;  Schouler,  Pet'r,  134  Mass.  426. 


VESTING   OF  POWERS  —  EXECUTION   OP  POWERS      55 

office,  because  there  was  an  implied  intention  to  trust  to 
the  discretion  of  two  or  more  trustees,  but  not  to  that  of 
one,  or  to  trust  to  A  and  B  but  not  to  A  alone.1  Such 
phrases  are  but  little  regarded  now,  and  the  preference 
for  the  individual  to  the  exclusion  of  the  trustee  for  the 
time  being  must  be  clearly  expressed.2  If,  however, 
there  is  a  personal  confidence  in  the  individuals  who  are 
named  trustees,  it  will  not  survive,  or  pass  to  their  suc- 
cessors,8 except  where  the  power  is  limited  to  them  and 
their  heirs  and  assigns.  In  that  case  the  powers  will 
pass  to  the  trustees'  successors  but  not  to  their  personal 
representatives.4 

Execution  of  Powers.  —  The  essential  part  of  the  exe- 
cution of  a  power  is  the  exercise  of  the  discretion  vested 
in  the  trustees.  As  this  discretion  vests  in  them 
jointly,5  it  can  only  be  executed  by  the  joint  action  of  all 
the  trustees;  and  an  execution  by  part,  even  though  a 
majority,  is  void,  unless  provided  for  by  the  instrument.6 
Hence  the  insanity  or  refusal  to  concur  of  one  trustee 
can  block  all  action,7  and  where  the  trustees  disagree,  the 
only  remedy  is  to  have  a  trustee  removed  and  a  new  one 
appointed,8  which  the  court  will  not  do,  unless  the  con- 

1  Hibbard  v.  Lamb,  Arab.  309.     Supra,  p.  5. 

2  In  re  Smith,  L.  R.  (1904),  1  Ch.  139 ;  Mercer  v.  Safe  Dep.  &  Trust 
Co.,  91  Md.  102;  Sells  v.  Delgado,  186  Mass.  25;  Franklin  v.  Osgood, 
14  Johus.  527.    But  it  still  remains  a  question  of  intention.    See  Snyder 
v.  Safe  Dep.  &  Trust  Co.,  93  Md.  225 ;  Kennard  v.  Bernard,  98  Md.  513 ; 
Dillingham  v.  Martin,  61  N.  J.  Eq.  276. 

8  Benedict  v.  Dunning,  110  App.  Div.  (N.  Y.)  303. 
4  Warnecke  v.  Lembca,  71  111.  91. 

6  Stott  v.  Lord,  31  L.  J.  Ch.  391 ;  Ray  v.  Doughty,  4  Blackf.  115. 

8  Attorney  General  v.  Gleg,  1  Atk.  356 ;  Morville  v.  Fowle,  144  Mass. 
109 ;  Vandever's  Appeal,  8  Watts  &  S.  405 ;  In  the  Matter  of  Wadsworth, 
2  Barb.  Ch.  381.  A  charity  differs  from  an  ordinary  trust,  and  a  ma- 
jority of  a  board  may  act.  City  of  Boston  v.  Doyle,  184  Mass.  373. 

7  Swale  v.  Swale,  22  Beav.  584.     Supra,  p.  15. 

8  Mannhardt  v.  111.  Staats  Zcitnng  Co.,  90  111.  App.  315.    But  the 
rule  is  weak.    The  court,  instead  of  removing  the  trustee,  often  com- 


56  MUST   BE   JOINT — DELEGATION 

duct  of  the  trustee  has  been  factious  and  unreasonable 
or  promoted  by  corrupt  or  selfish  motives.1 

Must  be  Joint.  —  Trustees  are  joint  tenants  at  law, 
hence  one  of  them-may  give  a  debtor  a  good  discharge  if 
he  pays  his  debt  into  his  hand ; 2  hence  one  trustee  may 
collect  dividends,  rents,  interest,  or  any  other  income  ac- 
cruing; and  be  may  receive  a  simple  debt  or  discharge  a 
mortgage.3  He  cannot,  however,  assign  a  mortgage,  as 
all  the  trustees  must  act  in  a  sale  or  assignment  of  the 
trust  property,4  nor  could  he  collect  a  judgment,  as  all 
the  trustees  must  join  in  the  suit.5  Nor  can  one  trustee 
bind  all  by  a  compromise.6  Conversely,  as  he  may  col- 
lect it  alone,  so  one  trustee  may  pay  out  income,  but  in 
dealing  with  matters  of  principal  all  should  join.7 

In  equity  a  joint  receipt  is  required;  hence  if  the 
debtor  knows  that  the  trustee  is  committing  a  breach  of 
trust  in  receiving  the  money,  or  if  be  has  been  warned  to 
pay  to  all  the  trustees  only,  he  will  not  be  protected  by 
his  single  receipt.8 

The  liability  of  one  trustee  for  allowing  his  co-trustee 
to  receive  or  have  the  custody  of  the  property  is  a  differ- 
ent question  and  is  treated  below.9 

Delegation.  — The  execution  of  a  power  in  its  essential 
part  cannot  be  delegated  either  to  a  stranger  or  by  one  of 

pels  action.  Infra,  pp.  59  et  seq.  Marshall  v.  Caldwell,  125  Mass.  425 ; 
Garvey  v.  Garvey,  150  Mass.  185 ;  Barbour  v.  Cummings,  26  R.  I.  201 ; 
Collister  v.  Fassitt,  163  N.  Y.  281. 

1  Norcum  v.  D'Oench,  17  Mo.  98.     Supra,  p.  24. 

2  Bowes  v.  Seeger,  8  Watts  &  S.  222. 

8  Ochiltree  v. Wright,  1  Dev.  &  Bat.  Eq.  336.   Supra,  p.  20;  infra,  p.  89. 

4  Mendes  v.  Guedalla,  2  Johns.  &  Hem.  259 ;  Ridgley  v.  Johnson, 
11  Barb.  527. 

5  Infra,  p.  75. 

6  Stott  v.  Lord,  31  L.  J.  Ch.  391. 
^  Infra,  p.  87. 

8  Lee  v.  Sankey,  L.  R.  15  Eq.  204;  Magnus  v.  Queensland  N.  Bk., 
37  Ch.  Div.  466 ;  Webb  v.  Ledsam,  1  K.  &  J.  385. 

9  Infra,  pp.  104,  105,  148  et  seq. 


DELEGATION  57 

the  trustees  to  another.1  Nor  can  the  trustees  divest 
themselves  of  their  discretion  by  asking  the  advice  of  the 
court.2  Thus  a  trustee  cannot  appoint  an  agent  to  sell 
the  property 8  or  to  manage  the  real  estate,  or  hand  the 
funds  to  a  solicitor  to  invest,4  because  by  doing  so  he 
delegates  the  essential  part  of  his  power,  namely,  the  ex- 
ercise of  his  discretion  in  determining  the  selling  or  let- 
ting prices,  or  the  need  of  repair,  or  the  appropriateness 
of  the  security  selected  for  investment.5 

This  does  not  prevent  the  trustee  from  intrusting  the 
unessentials  to  an  agent,6  such  as  the  delivery  or  execu- 
tion of  a  deed  or  lease,  or  any  other  matter  not  requiring 
the  exercise  of  discretion,  unless  the  trust  instrument  re- 
quires his  personal  execution  of  these  unessential  matters. 
A  convenient  mode  of  action  in  such  cases  is  to  author- 
ize the  agent  to  contract  subject  to  the  assent  of  the 
trustee.7 

Hence  a  trustee,  having  fixed  the  terms  of  sale,  may 
give  his  attorney  .a  special  power  to  carry  out  the  sale 
and  convey  the  property;  or  in  the  case  of  a  sale  of 
stocks  may  sign  a  special  power  of  attorney  in  blank  to 
transfer  the  stock,  and  the  transferee  will  not  be  put  on 
his  inquiry,  as  there  is  nothing  to  suggest  that  the  trustee 
has  delegated  his  discretion.  But  an  attempt  to  reach 
the  same  results  under  a  general  power  would  be  other- 
wise, as  the  evident  implication  is  that  the  trustee  has 
not  passed  on  this  particular  case,  and  has  delegated  his 
discretion  to  his  general  attorney.8 

1  Pearson  v.  Jamison,  1   McLean  (Ky.),  197 ;  Attorney  General 
v.  Gleg,  1  Atk.  356  ;   Berger  v.  Duff,  4  Johns.  Ch.  368.     See  article 
in  12  Central  L.  J.  266-270. 

2  Rutland  Trust  Co.  v.  Sheldon,  59  Vt.  374. 
8  Berger  v.  Duff,  4  Johns.  Ch.  368. 

*  Bostock  v.  Floyer,  L.  R.  1  Eq.  26. 

6  Woddrop  v.  Weed,  154  Pa.  St.  307. 

8  Gillespie  v.  Smith,  29  111.  473.    Infra,  pp.  69,  90. 

7  Hawley  v.  James,  5  Paige,  318,  487. 

8  Lowell,  Transfer  of  Stock,  §  76 ;  Hawley  v.  James,  ubi  supra. 


58  PARTIAL  OR  DEFECTIVE   EXECUTION 

Partial  or  Defective  Execution.  —  A  power  need  not  be 
executed  at  one  time,  and  if  it  be  only  partially  exe- 
cuted, the  execution  may  be  completed  at  a  later  date.1 

If  the  execution  is  defective,  the  court  will  compel  the 
trustee  to  complete  the  execution  in  favor  of  a  purchaser 
for  value,  or  one  having  a  meritorious  claim,  but  it  will 
not  aid  a  volunteer.2 

If  the  power  is  substantially  executed  in  essential  mat- 
ters, the  execution  will  be  upheld  and  confirmed  by  the 
court,8  in  spite  of  errors  of  execution  as  to  non-essen- 
tials; but  if  there  has  been  error  in  execution  as  to 
non-essentials  prescribed  by  the  trust  instrument  the 
execution  is  absolutely  void,  and  the  court  will  not  inter- 
fere. Thus,  if  the  power  is  to  be  executed  by  deed,  an 
execution  by  parol  or  by  will  is  ineffective,4  or  if  it  is  to 
be  executed  by  deed  witnessed  by  two  men,  a  deed  wit- 
nessed by  a  man  and  a  woman  will  not  do.5  Nor  could  a 
power  to  appoint  by  will  be  executed,  waived,  or  extin- 
guished in  any  other  way.6 

If  the  validity  of  a  special  power  be  dependent  on  a 
condition,  the  condition  must  be  proved  and  may  be  trav- 
ersed, e.  g.,  where  a  ti'ustee  was  to  sell  land  to  support 
the  beneficiary,  where  there  proved  to  be  plenty  of  per- 
sonalty, it  was  held  that  no  power  of  sale  arose.7 

If  the  consent  of  a  beneficiary  is  a  condition  precedent, 
the  subsequent  ratification  will  not  be  sufficient,8  and  if 
any  party  die  whose  consent  is  necessary,  the  power  will 

1  Sugden  on  Powers,  3d  Amer.  ed.,  i.  79-85. 

2  See  p.  69. 

8  Sugden  on  Powers,  3d  Amer.  ed.,  i.  391  ;  Amer.  &  Eng.  Encyc. 
Law,  vol.  18,  p.  927.  Thus  where  the  same  persons  were  trustees  and 
executors  and  had  a  power  to  sell  as  trustees  but  not  as  executors,  a 
deed  signed  by  them  as  executors  was  held  to  be  a  sufficient  execution 
of  their  power  as  trustees.  Philbin  v.  Thurn,  103  Md.  342. 

4  Carpenter  v.  Cook,  60  Pa.  475. 

6  Sugden  on  Powers,  3d  Amer.  ed.,  i.  299,  300. 

6  Ruggles  v.  Tyson,  81  N.  W.  Rep.  367  (Wise.  1899). 

7  Minot  v.  Prescott,  14  Mass.  495. 

8  Batemau  v.  Davis,  3  Mad.  98. 


CONTROL  OP  COURT  OVER   POWERS   OP   TRUSTEE     59 

be  lost;1  but  in  a  case  where  the  consent  of  a  class  of 
beneficiaries  was  required  to  protect  their  own  interests, 
and  they  all  died,  it  was  held  that,  as  there  were  no  inter- 
ests to  be  protected,  the  power  had  become  unconditional, 
and  the  assent  was  no  longer  necessary  to  its  execution.2 
And  in  some  jurisdictions  it  is  provided  by  statute  that 
where  the  person  has  died  whose  consent  was  necessary 
to  the  execution  of  the  power,  the  court  may  act  in  his 
place. 

So  too  a  decree  of  the  court  acting  by  statute  authority 
is  invalid  which  does  not  conform  to  the  statute  authoriz- 
ing it;  since  the  court  can  only  execute  the  power  given 
it  by  statute,  and  is  not  itself  the  party  creating  the 
right,  as  it  is  where  it  acts  on  its  own  equitable  jurisdic- 
tion.8 

Only  those  interested  can  object  to  the  execution  of 
the  power. 

Control  of  the  Court  over  Powers  that  it  is  the  Trus- 
tee's Duty  to  Exercise.  —  Where  a  trustee  has  a  duty  to 
perform  he  is  held  to  perform  it  with  sound  discretion, 
and  is  liable  if  he  fails  to  do  so.  It  follows  that  the 
court  will  control  the  trustee's  powers  where  they  are 
ancillary  to  his  duties,4  and  he  must  exercise  -them  ac- 
cording to  the  court's  standard  of  a  sound  discretion.6 

The  discretion  given  the  trustee  by  the  trust  instru- 
ment as  to  time  or  manner  of  performing  these  duties, 

1  Alley  v.  Lawrence,  12  Gray,  373. 

2  Leeds,  Ex'r  v.  Wakefield,  10  Gray,  514. 
8  Infra,  p.  66. 

*  Read  v.  Patterson,  44  N.  J.  Eq.  21 1 ;  Nickerson  v.  Cockhill,  3  DeG. 
J.  &  S.  622 ;  Re  Courtier,  34  Ch.  Div.  136.    Such  powers  are  sometimes 
called  "  powers  coupled  with  a  trust." 

*  What  is  a  sound  discretion  is  not  always  easily  determined.    Lord 
Blackburn  says,  "  Judges  and  lawyers  who  see  brought  before  them  the 
cases  in  which  losses  have  been  incurred,  and  do  not  see  the  infinitely 
more  numerous  cases  in  which  expense  and  trouble  and  inconvenience 
are  avoided,  are  apt  to  think  men  of  business  rash."    Speight  v.  Gaunt, 
9  App.  Cas.  1. 


60     CONTROL   OP  COURT   OVER   DISCRETIONARY   POWERS 

does  not  convert  the  corresponding  powers  into  "discre- 
tionary powers  "  properly  so  called,  or  oust  the  court  of 
its  control  over  the  trustee's  action.1  Thus,  trustees 
being  given  a  discretion  as  to  time  of  conversion  can  be 
compelled  to  sell  vacant  land  if  they  fail  to  do  so  within 
a  reasonable  time,2  or  they  may  be  restrained  from 
changing  an  investment  where  there  is  no  good  reason 
for  doing  so.3  As  noted  hereafter,  discretion  as  to  the 
amount  of  a  payment  is  usually  treated  otherwise.  If 
the  trustee  has  not  used  his  discretion  in  such  a  way  as  to 
meet  the  court's  approval  but  has  acted  in  good  faith, 
honestly  and  without  selfish  motive,  he  will  be  treated 
with  indulgence,  especially  if  he  has  acted  under  advice 
of  counsel,4  which  shows  that  he  was  acting  carefully. 
Yet  if  the  action  amounts  to  a  gross  breach  of  trust,  such 
as  investing  in  a  second  mortgage,  the  court  will  not 
excuse  him  even  under  these  circumstances.4- 

It  is  said  that  the  court  will  ratify  anything  which  it 
would  order  done,6  but  this  is  not  quite  true,  since  a 
court  will  not  ratify  an  unauthorized  conversion,  and  it 
is  not  quite  safe  to  rely  on  it  since  a  court  may  not  look 
at  the  matter  just  as  the  trustee  does;  hence  if  a  trustee 
has  any  doubt  as  to  his  duty,  his  best  course  is  to  ask  the 
instruction  of  the  court  before  he  acts.7 

Control  of  Court  over  Discretionary  Powers.  —  Purely 
discretionary  powers  are  special  powers  given  the  trustee 

1  Bethel  v.  Abraham,  L.  R.  1 7  Eq.  24 ;  Keeler  r.  Lauer,  85  Pac.  541 , 
Kansas  (1906) ;  Walker  v.  Shore,  19  Ves.  Jr.  387  and  note ;  Prendegast 
v.  Prendegast,  3  H.  L.  Cases,  195,  p.  218;  Eldredge   v.  Heard,  106 
Mass.  579  ;  Marshall  v.  Caldwell,  125  Mass.  435 ;  Arnold  v.  Gilbert,  5 
Barb.  (N.  Y.)  190,  p.  195. 

2  Marshall  v.  Caldwell,  125  Mass.  435 ;  Arnold  v.  Gilbert,  5  Barb. 
(N.  Y.)  190,  p.  195. 

8  Bertron  v.  Polk,  101  Md.  686. 

*  Ellig  v.  Naglee,  7  Cal.  683  ;  Crabb  v.  Young,  92  N.  Y.  56 ;  Milner 
v.  Proctor,  20  Ohio  St.  442. 

5  Owings  v.  Rhodes,  65  Md.  408 ;  Gilmore  v.  Tuttle,  32  N.  J.  Eq.  641. 
«  Perry,  §  476.  7  Infra,  p.  96. 


CONTROL  OP   COURT   OVER   DISCRETIONARY   POWERS     61 

by  the  maker  of  the  trust  not  coupled  with  a  duty,  but 
resting  on  the  trustee's  discretion  as  to  whether  they  shall 
be  executed  or  not.1  The  court  cannot  control  the  trus- 
tee's action,  since  it  is  a  matter  of  choice  whether  he  will 
or  will  not  act,  and  he  is  under  no  legal  obligation  to  do 
either.2  The  maker  of  the  trust  meant  to  trust  to  the 
conscience  and  discretion  of  the  trustee,  and  not  to  the 
court.8  Nor  can  the  court  inquire  into  the  trustee's  rea- 
sons for  acting  or  not  acting,  since  he  and  not  the  court 
is  the  tribunal;4  but  if  he  gives  his  reasons,  which  he 
cannot  be  compelled  to  do,  the  court  may  review  them, 
and  if  it  finds  them  insufficient  may  reverse  his  action.5 
It  also  follows  that  the  trustee  cannot  divest  himself  of 
his  discretion  by  consulting  the  court.6 

If,  however,  the  execution  of  the  power  becomes  a 
matter  of  litigation  or  is  brought  into  court  for  execu- 
tion the  holder  can  only  exercise  it  with  the  court's  ap- 
proval;7 nor  will  the  court  permit  the  trustee  to  act 
arbitrarily  from  mere  whim  or  caprice,8  or  from  fraud  or 
prejudice.9  What  amounts  to  fraud  is  treated  in  the 
next  section. 

Where  a  trustee  is  given  discretion  as  to  the  amount  of 
income  or  principal  to  be  paid  to  the  beneficiary  or  ap- 

1  Lewin,  690. 

2  Sellew's  Appeal,  36  Conu.  186;    Bacon  v.  Bacon,  55  Vt.  243; 
Costabadie  v.  Costabadie,   6   Hare,  410 ;    Mannhardt  v.  111.   Staats 
Zeitnng  Co.,  90  111.  App.  315. 

8  Pink  v.  De  Thuisey,  2  Madd.  157 ;  Portsmouth  v.  Shackford,  46 
N.  H.  423 ;  Haydel  v.  Hurck,  72  Mo.  253 ;  Blythe  v.  Green,  38  Atl. 
743  (N.  J.  Ch.). 

<  Re  Vanderbilt,  20  Hun  (N.  Y.),  520. 

*  Re  Beloved  Wilkes'  Charity,  3  McN.  &  G.  440,  448. 

6  Rutland  Trust  Co.  v.  Sheldon,  59  Vt.  374 ;  Proctor  v.  Heyer,  122 
Mass.  525. 

7  Bethell  v.  Abraham,  L.  R.  17  Eq.  24;  Bull  v.  Bull,  8  Conn.  47. 
Perry,  §511.     By  paying  into  court  the  trustee  renounces  his  dis- 
cretion.    Re  Nettlefold,  59  L.  T.  315. 

8  Stephenson  v.  Norris,  107  N.  W.  343(Wisc.  1906) ;  Tabor  v.  Brooks, 
10  Ch.  Div.  273 ;  Bacon  v.  Bacon,  55  Vt.  243. 

9  Garvey  v.  Garvey,  150  Mass.  185.     Supra,  p.  23. 


62     CONTROL   OP   COURT   OVER   DISCRETIONARY   POWERS 

plied  to  his  support,,1  or  has  discretion  as  to  the  appor- 
tionment of  a  fund  among  a  class,  the  general  rule  is  to 
construe  his  power  as  a  purely  discretionary  power,  and 
while  the  court  will  insist  on  his  making  some  payment,2 
it  will  not  interfere  with  the  trustee's  determination  as  to 
the  amount  unless  there  is  bad  faith.8  It  has  been  held 
that  where  no  express  discretion  has  been  given  the  trus- 
tee he  is  bound  to  exercise  a  sound  discretion  in  paying 
over  the  income  to  a  beneficiary  who  is  not  a  proper  per- 
son to  receive  money.4 

On  the  other  hand,  the  court  has  sometimes  held  the 
discretion  as  to  the  amount  of  the  payment  to  be  ancil- 
lary to  the  duty  to  make  some  payment,  and  has  accord- 
ingly assumed  the  control  of  the  whole  matter.5 

The  rules  governing  the  court's  control  over  the 
trustee's  powers,  have  been  stated  above  as  they  appear 
on  the  whole  to  be  established  by  weight  of  authority 
and  principle;  but  unfortunately  the  authorities  are  con- 
flicting, and  the  reasoning  in  the  decisions  confused  and 
perplexing.  Some  legislatures  and  courts  assert  the 
right  to  control  the  exercise  of  all  powers,  whether  purely 
discretionary  or  not,6  regardless  of  the  fact  that  they 

1  As  to  infant's  support,  see  infra. 

2  Colton  v.  Colton,  127  U.  S.  300;  Osborne  v.  Gordon,  86  Wise.  92; 
Aldrich  v.  Aldrich,  12  R.  I.  141 ;  Bacon  v.  Bacon,  55  Vt.  243 ;  Collister 
w.  Fassitt,  163  N.  Y.  281. 

8  Gisborne  v.  Gisborne,  2  App.  Cas.  300;  Eldredge  v.  Heard,  106 
Mass.  579;  National  Exchange  Bank  v.  Button,  147  Mass.  131 ;  Cather- 
wood's  Appeal,  52  Pa.  St.  154;  Kimball  v.  Blanchard,  64  A.  645;  Mer- 
ritt  v.  Corlies,  71  Hun,  612  ;  Bacon  v.  Bacon,  55  Vt.  243. 

*  Mason  v.  Jones,  2  Barb.  229  ;  Gott  v.  Cook,  7  Paige,  338. 

5  Feltham  v.  Turner,  23  L.  T.  (N.  s.)  345;   Stephenson  v.  Norris 
107  N.  W.  343  (Wise.  1906) ;  Chase  v.  Chase,  2  Allen,  101 ;  Ireland 
17.  Ireland,  84  N.  Y.  321 ;  Osborne  v.  Gordon,  86  Wise.  92  ;  Collister  v. 
Fassitt,  163  N.  Y.  281  ;  Barbour  v.  Cummings,  26  R.  I.  201. 

6  Clark  v.  Clark,  21  Misc.  Rep.  (N.  Y.)  272;  Stephenson  v.  Norris, 
107  N.  W.  343  (Wise.  1906) ;  Curtis  v.  Smith,  6  Blatch.  537,  p.  543 ;  In  re 
Hodges,  7  Ch.  Div.  754,  p.  761 ;  Cromie  v.  Bull,  81  Ky.  646 ;  Feltham 
t7.   Turner,  23  L.  T.  (N.  s.)  345;  Rev.   Civ.    Code   So.  Dak.  (1903), 
§  1644;  Cal.  Civ.  Code  (1903),  §  2629. 


FRAUD   IN  THE   EXECUTION   OP   A   POWER  63 

thus  set  aside  the  provisions  of  the  settlement  vest- 
ing the  discretion  in  the  trustee;  and  thus  exercise 
a  power,  the  constitutionality  of  which  may  well  be 
doubted. 

Practically,  if  the  trustee  uses  his  discretion  in  any 
case  honestly  and  reasonably  the  court  will  not  interfere 
with  him ; 1  but  if  he  acts  unreasonably  he  will  probably 
be  overruled  by  the  court  for  one  reason  or  another,  no 
matter  how  clearly  the  testator  may  have  stipulated  that 
he  relied  on  the  judgment  of  the  trustee,  and  not  that  of 
the  court.2 

"What  amounts  to  Fraud  in  the  Execution  of  a  Power. 
—  If  the  trustee  exercises  his  power  in  such  a  manner  as 
to  amount  to  a  fraud,  the  court  can  on  that  ground  set  it 
aside,  having  the  usual  jurisdiction  to  remedy  a  fraud, 
and  not  because  it  has  jurisdiction  to  review  the  exercise 
of  the  power.  And  accordingly  the  person  attacking 
the  exercise  of  a  power  on  the  ground  of  fraud  must 
prove  his  case  affirmatively.8 

If  the  trustee  exercise  an  unlimited  power  for  his  own 
gain,  or  to  get  an  advantage  for  himself  or  his  family,  it 
will  be  a  fraud,  though  not  injurious  to  others.4 

If  he  exercise  a  power  in  such  a  way  as  to  defeat  the 
purposes  of  the  trust,  as,  for  instance,  if  under  a  power 
to  use  the  principal  for  the  support  of  the  beneficiary, 
he  pays  the  whole  amount  over  at  one  time  for  the  pur- 
pose of  revoking  the  trust,  it  will  be  a  fraud.5 


1  Eldredge  v.  Hurd,  106  Mass.  579 ;  Cromie  v.  Bull,  ubi  supra ;  In  re 
Hodges,  ubi  supra. 

2  Prendegast  v.  Prendegast,  3  H.  L.  Cases,  195;  Barbour  v.  Cum- 
mings,  26  R.  I.  201 ;  Collister  v.  Fassit,  163  N.  Y.  281.     Davis,  Appel- 
lant, 183  Mass.,  499. 

s  Re  Brittlebank,  30  W.  R.  99. 

*  Bostick  v.  Winton,  1  Sneed  (Tenn.),  524. 

*  Lovett  v.  Farnham,  169  Mass.  1  ;  Reade  v.  Continental  Trust  Co. 
48  App.  Div.  (N.  Y.)  632.    See  infra,  p.  82. 


64  EXTINCTION   OF  POWERS 

If  he  exercise  a  power  for  corrupt  motives1,  or  out  of 
spite  or  revenge,  the  execution  will  be  set  aside.2 

Thus  where  a  trustee  appointed  a  double  portion  to  bis 
son  to  avoid  a  lawsuit,  the  execution  was  set  aside.8 

Extinction  of  Powers.  —  A  power  may  become  extinct 
by  the  death  or  disclaimer  of  one  of  those  to  whom  it  is 
given;4  but  it  cannot  be  waived  or  extinguished  as 
against  a  donee  who  is  not  a  party  to  the  waiver.5 

A  power  cannot  be  exercised  after  the  trust  has  ex- 
pired,6 or  the  purposes  for  which  it  was  given  have  been 
fulfilled  or  become  impossible;  as,  for  instance,  where  a 
power  was  given  to  sell  and  convert  into  cash  for  A,  and 
A  had  died.7 

A  power  will  not  be  exhausted  by  an  exercise  of  part; 
but  where  the  court  gives  the  power  it  may  be  otherwise. 
As,  for  instance,  a  power  to  sell  real  estate  is  not  ex- 
hausted by  the  sale  of  the  original  property ;  but  extends 
to  real  property  bought  with  the  proceeds,  and  if  part  of 
a  tract  of  land  be  sold  under  power  of  sale  at  one  time, 
the  balance  may  be  sold  at  a  later  date ;  or  if  a  power  of 
appointment  fail,  it  may  be  exercised  again.8 

III.    PARTICULAR  POWERS. 

Sale.  —  Power  of  Sale. — Although  a  power  to  sell  is 
one  of  the  most  important  powers  a  trustee  may  have,  it 

1  As  to  "  Whim  and  Caprice,"  see  the  preceding  section.    The  real 
ground  for  setting  aside  the  execution  in  such  cases  is  fraud. 

2  Garvey  v.  Garvey,  150  Mass.  185.  - 

8  Holt  v.  Hogan,  5  Jones  Eq.  (N.  C.)  82. 
*  Supra,  pp.  5,  54,  55. 

6  Frazer  v.  Western,  1  Barb.  Ch.  220,  240 ;  Moll  v.  Gardner,  214 
111.  248. 

6  Ruggles  v.  Tyson,  81  N.  W.  367  (Wise.  1899). 

7  Slocum  v.  Slocum,  4  Edw.  Ch.  613 ;  Lessee  of  Ward  v.  Barrows, 
2  Ohio  St.  241.     See  supra,  p.  19. 

8  Supra,  p.  58 ;  Sugden  on  Powers,  3d  Amer.  ed.  391. 


SALE  —  POWER  OP  SALE  65 

is  not  a  general  power  incidental  to  his  office,1  since  the 
original  theory  of  a  trust  did  not  contemplate  a  trustee's 
doing  anything  but  holding  and  taking  care  of  the  prop- 
erty, the  object  of  a  trust  then  being  to  avoid  feudal  dues 
and  forfeitures.2  At  the  present  day  the  usual  object  of  a 
trust  is  to  settle  property  in  the  hands  of  persons  of 
good  business  ability  to  manage  it  for  the  benefit  of 
others  not  possessed  of  such  ability ;  or  to  settle  property 
so  that  it  may  form  a  family  fund  to  descend  in  the 
family  as  long  as  it  can  be  tied  up,  and  so  that  the  prop- 
erty may  not  be  dissipated  by  the  improvidence  or  bad 
management  of  the  persons  to  be  benefited ;  who  usually 
are,  in  part  at  least,  persons  unfitted  for  business  and 
the  care  of  large  estates. 

The  policy  of  the  modern  trust  is  to  give  the  trustees 
the  fullest  power  to  manage  the  estate  to  the  best  advan- 
tage, and  hence  a  power  of  sale  is  a  feature  of  all  well 
drawn  trust  instruments. 

In  some  jurisdictions  there  is  a  statutory  provision  that 
every  will  shall  be  construed  to  give  the  trustees  power 
to  change  all  trust  investments.8 

In  many  cases  where  the  power  is  not  expressly  given, 
it  will  be  implied  from  the  fact  that  the  trustee  is  given  a 
duty  which  cannot  be  performed  without  a  power  of 
sale.4  As,  for  instance,6  where  the  trust  was  to  pay  the 
settlor's  debts,  and  then  the  income  to  B,6  or  where  the 


1  Wheate  v.  Hall,  17  Ves.  Jr.  80 ;  Jones  v.  Atch.,  Top.  &  S.  F<?  Rd., 
150  Mass.  304;  Code  Ga.  (1895),  §  3172;  Ky.  Stat.  (1894),  §  2356. 

2  Lowell,  Transfer  of  Stock,  §  62. 

8  R.  I.  Gen.  Laws  (1896),  ch.  208,  §  12  ;  Ky.  Stat.  (1894),  §4707- 
In  New  York,  Michigan,  West  Virginia,  and  Wyoming,  power  of  sale 
to  pay  collateral  inheritance  tax,  Rev.  Stat.  N.  Y.  (1901),  p.  3594, 
§220;  Pub.  Acts,  Mich.  (1903),  ch.  195,  §5;  Code  W.  Va.  (1906), 
§  1073;  Session  Laws  of  Wyoming,  (1903),  ch.  80,  §  5. 

*  Supra,  p.  54;  Jones  v.  Atch.,  Top.  &  S.  Fe'Rd.,  150  Mass.  304. 

6  To  distribute  the  property,  Casey  v.  Canavan,  93  HI.  App.  538; 
Dodson  v.  Ashley,  101  Md.  513. 

•  Goodrich  v.  Proctor,  1  Gray,  567. 

5 


66  SALE   UNDER   STATUTES 

trustees  were  to  invest  or  reinvest  in  safe  securities,1  or 
where  they  were  given  the  power  to  manage  and  invest,2 
or  to  invest  as  seems  prudent.8  So,  too,  where  the  maker 
of  the  trust  leaves  illegal  and  improper  investments,  the 
trustees  have  an  implied  power  to  sell.4  But  the  power 
cannot  be  engrafted  on  to  the  trust  by  inserting  it  in  the 
deed  of  a  property  purchased  by  the  trustee.5 

Sale  under  Statutes.  —  In  most  jurisdictions  power  is 
given  to^  the  probate  court  by  statute  to  give  the  trustees 
a  license  to  sell,6  and  such  statutes  are  held  to  be  consti- 
tutional.7 In  such  cases  the  power  given  the  court  is 
subject  to  the  same  general  rules  as  other  powers,  and  the 
decree  of  the  court  must  conform  to  the  statute,  and  not 
exceed  it.8 

The  statutes  generally  provide  that  the  court,  on  the 
application  of  any  one  interested,  may  order  a  sale  if  the 
court  thinks  it  necessary  or  expedient,  and  provide  for 
notice  to  all  persons  in  interest,  and  the  appointment  of 
guardians  for  all  minors  or  persons  unascertained  or  not 
in  being. 

Such  statutes  do  not  give  the  court  power  to  act  in  dis- 
regard of  the  testator's  wishes,9  and  the  fact  that  the  in- 

1  Purdie  v.  Whitney,  20  Pick.  25.     To  invest  and  pay  income,  Foil 
v.  Newsome,  138  N.  C.  115. 

2  Harvard  College  v.  Weld,  159  Mass.  114. 

8  Boston  Safe  Deposit  Co.  v.  Mixter,  146  Mass.  100.  Exercise  all 
requisite  power  and  authority,  Dickinson  v.  N.  Y.  Biscuit  Co.,  211  111. 
468.  4  Bohlen's  Est.,  75  Pa.  St.  304. 

6  Stone  v.  Kahle,  54  S.  W.  375  (Texas,  1899),  but  see  s.  C.  95 
Texas,  106. 

6  Mass  Rev.  Laws  (1902),  ch.  147,  §§  15,  17;  Gen.  Stat.  Conn. 
(1902),  §§  253, 1035  ;  Laws  of  Del.  (1893),  p.  721 ;  Code  Ga.  (1895), 
§  3172  ;  Rev.  Stat.  Me.  (1903),  ch.  70,  §  9 ;  Pub.  Stat.  N.  H.  (1901), 
ch.  198,  §  10 ;  Stat.  Vt.  (1894),  §  2617  ;  Code  Va.  (1887),  §§  2616-2622  ; 
Annot.  Stat.  Wise.  (1899),  §§  2100  a,  4030;  Rev.  Stat.  N.  Y.  (1901), 
p.  3028,  §  85  ;  Rev.  Stat.  Ind.  (1894)  §§  3411,  3415. 

~  Norris  v.  Clymer,  2  Pa.  St.  277. 

8  Williamson  v.  Berry,  8  How.  495,  531. 

9  Johnstone  v.  Baber,  8  Beav.  233  ;  Ball  v.  Safe  Deposit  and  Trust 


SALE  UNDER  STATUTES  67 

come  will  be  increased  is  not  a  sufficient  reason  to  decree 
a  sale.1 

Where  there  is  no  general  statute,  the  legislature  may 
authorize  a  sale  by  special  act,  and  often  does  so,2  but 
even  a  sale  under  special  a.ct  of  the  legislature  in  direct 
controversion  of  the  settlement  has  been  held  void  in 
Pennsylvania;3  but  elsewhere  a  special  act  for  a  sale, 
though  contrary  to  the  testator's  intentions,  has  been  held 
constitutional,  as  a  change  of  investment,  where  ade- 
quate provision  is  made  to  protect  the  interests  of  all 
persons  interested  in  the  trust.4 

Moreover,  where  it  is  impossible  to  use  the  property  so 
as  to  carry  out  the  testator's  wishes,  the  court  without  an 
act  of  the  legislature  may  order  a  sale  on  the  cy  pres 
doctrine,6  and  if  all  parties  in  interest  were  parties  to  the 
suit,  or  represented  by  guardian,  it  is  difficult  to  see 
what  remedy  they  would  possess  at  a  later  time,6  and  the 
trust  passes  from  the  property  sold  to  the  fund  received  in 
its  place.7 

There  are  statutes  authorizing  the  court  to  order  such 
sales,  and  sales  of  estates  which  are  subject  to  contingent 
remainders  or  executory  devises  in  some  jurisdictions,8 
and  providing  for  the  appointment  of  guardians  to  repre- 
sent persons  who  are  unascertained  or  not  in  being. 

If  such  persons  are  not  represented,  the  sale  is  of  no 

Co.,  92  Md.  503  ;  52  L.  R.  A.  403  ;  but  in  Weld  v.  Weld,  23  R.  1. 31 1,  the 
court  directed  a  sale  of  bonds  which  were  falling  contrary  to  testator's 
expectations. 

1  Davis,  Pet'r,  14  Allen,  24. 

2  Stanley  v.  Colt,  5  Wall,  119. 

8  Ervine's  Appeal,  16  Pa.  St.  256. 

*  Clark  v.  Hayes,  9  Gray,  426  ;  Leggett  v.  Hunter,  19  N.  Y.  445; 
Norris  v.  Clymer,  2  Pa.  St.  778. 

6  Weeks  v.  Hobson,  150  Mass.  377  ;  Ryan  v.  Porter,  61  Tex.  106 ; 
Attorney  General  v.  Briggs,  164  Mass.  561. 

6  Baker  v.  Lorillard,  4  Comst.  257 ;  Ansley  v.  Pace,  68  Ga.  403. 

'  Cowman  v.  Colquhoun,  60  Md.  127. 

8  Mass.  Rev.  Laws  (1902),  ch.  127,  §  28;  Gen.  Laws  R.  I.  (1896), 
ch.  201,  §  18. 


68     SALE  UNDER  STATUTES — EXECUTION   OP  POWER 

effect,  so  far  as  they  are  concerned,  should  they  after- 
wards become  entitled.1 

Power  of  Court  of  Equity  to  decree  a  Sale.  —  "Where 
there  is  no  statute  giving  any  court  power  to  decree  a 
sale,  a  court  of  equity  or  any  court  having  the  power  to 
regulate  trusts  may  do  so  as  one  of  its  ordinary  powers;  2 
but  where  such  a  statute  exists,  the  court  would  only  act 
under  and  to  the  extent  of  the  statute. 

Where  there  is  no  statute,  a  court  of  equity  will  decree 
a  sale  only  where  the  trust  cannot  otherwise  be  carried 
out,  or  where  a  sale  is  necessary  to  preserve  the  prop- 
erty;3 that  such  a  sale  would  be  beneficial  to  all  con- 
cerned is  not  sufficient  ground  of  action,  and  a  minor  or 
person  unascertained  might  object  on  becoming  sui  juris 
or  vested  with  the  estate.4 

It  is  said  that  a  court  will  not  confirm  an  unauthorized 
sale  even  though  it  would  have  authorized  it  had  it  been 
consulted ;  but  if  there  was  no  time  to  get  leave  of  court, 
and  the  sale  was  necessary  to  preserve  the  property,  the 
court  would  undoubtedly  ratify  it  as  the  trustee  had 
power  to  make  it  ex  necessitate. 

The  court  will  not  confirm  a  sale  where  the  trustee  had 
the  power  to  make  it.  It  is  unnecessary.5 

Execution  of  the  Power.  —  The  management  of  the  sale 
requires  discretion,  and  hence  cannot  be  delegated. 
Where  the  trustee  sells  at  private  sale  he  must  arrange 
the  terms  himself,  or  his  agent  may  arrange  them  subject 
to  his  approval. 

1  Baker  v.  Lorillard,  4  Comst.  257.  But  see,  contra,  Schley  v.  Brown, 
70  Ga.  64,  where  it  was  decided  that  persons  unascertained  and  not  in 
being  are  not  necessary  parties ;  but  in  this  case  a  special  power  was 
given  by  the  will  to  the  court,  and  so  the  parties  were  immaterial.  See 
infra,  p.  82.  2  Old  South  Soc.  v.  Crocker,  119  Mass.  1. 

8  Blacklow  v.  Laws,  2  Hare,  40 ;  Ruggles  v.  Tyson,  79  N.  W.  766 ; 
(Wise.  1899.)  See  Weld  v.  Weld,  cited  in  note  1,  on  preceding  page. 

*  Baker  v.  Lorillard,  ubi  supra ;  Ansley  v.  Pace,  68  Ga.  403  ;  Johns 
».  Johns,  172  111.,  472.  But  see  Denegre  v.  Walker,  214  111.  113, 

6  Murphy  v.  Union  Trust  Co.,  89  Pacific  R.  988. 


EXECUTION   OF  POWER  69 

It  is  settled  law  in  Missouri  that,  even  though  the  sale 
is  at  auction,  he  should  attend  in  person  to  decide  any 
question  arising  on  the  spot,  such  as  an  adjournment  or 
the  acceptance  of  a  bid,1  but  the  usual  practice  is  not  so 
strict  in  most  jurisdictions.  Once  having  successfully 
attended  to  the  details,  he  need  not  deliver  the  deed  in 
person  if  he  takes  proper  precautions  to  secure  the  pur- 
chase money. 

The  sale  must  be  carried  out  in  the  manner  prescribed 
in  the  trust  instrument  or  decree  from  which  the  author- 
ity is  derived;  and  any  error  or  omission  will  vitiate  the 
sale,  and  it  may  be  disaffirmed.2  For  instance,  if  the 
power  be  to  sell  for  cash,  a  sale  for  credit  cannot  be 
made,8  nor  will  a  power  to  sell,  exchange,  or  dispose  of 
justify  a  trustee  in  organizing  a  corporation  and  trans- 
ferring the  property  to  it,  taking  payment  in  shares.4  If 
the  power  be  to  sell  the  whole  estate,  a  partial  interest 
such  as  a  life  interest,  or  a  right  to  mine  or  cut  timber 
could  not  be  sold;  but  an  authority  to  sell  the  whole  es- 
tate will  not  prevent  a  sale  by  lots.6 

If  every  essential  requisite  has  been  substantially  ful- 
filled, the  court  will  affirm  the  sale,  even  though  there  may 
have  been  some  irregularity,  such  as  an  immaterial  error 
in  the  description  or  advertisement,6  or  appearance  of  a 
party.7  And  in  some  jurisdictions  there  are  statutory 
provisions  providing  that  the  title  of  a  purchaser  from  a 
licensee  of  a  competent  court,  who  has  given  bond  and 
due  notice  of  the  sale,  shall  not  be  set  aside  for  irregular- 
ity in  the  proceedings.8 

1  Graham  v.  King,  50  Mo.  22.          2  Knox  v.  Jenks,  7  Mass.  488. 

8  Waterman  v.  Spaulding,  51  111.  425. 

4  Garesche  v.  Levering  Investment  Co.,  146  Mo.  436 ;  Mitchell  v. 
Carrolton  Bank,  97  S.  W.  45.  But  see,  contra,  In  re  Spragne,  22  R.  I. 
413.  But  the  decision  seems  to  rest  somewhat  on  peculiarities  of  the 
will  and  statute  law. 

6  Ord  v.  Noel,  5  Madd.  438.  «  Knox  v.  Jenks,  7  Mass.  488. 

7  Mercier  v.  West  Kansas  Laud  Co.,  72  Mo.  473. 
»  Mass.  Rev.  Laws  (1902),  ch.  148,  §  19. 


70  EXECUTION   OF  POWER 

The  trustee  cannot  purchase  directly  or  indirectly 
either  for  himself  or  another  at  the  sale,  but  if  he  himself 
becomes  the  purchaser  the  sale  may  be  disaffirmed,1  but 
in  that  case  the  purchase  money  must  be  refunded.2 
There  is  no  objection  to  a  purchase  by  the  beneficiary 
unless  such  a  sale  negatives  the  testator's  intention.8 

If  there  is  any  fraud,  such  as  inadequate  notice,  or  if 
the  selling  price  is  wholly  inadequate,  so  that  it  amounts 
to  a  fraud,  the  sale  may  be  disaffirmed.4 

The  purchaser  must  ascertain  at  his  peril  that  the 
power  of  sale  arose,5  and  that  it  has  been  properly  carried 
out,6  and  if  conditions  are  attached  to  the  power  he  must 
see  that  they  are  properly  performed.  But  if  the  trustee 
has  a  general  power  of  sale  he  need  not  inquire  farther.7 
He  will  be  liable  if  he  have  notice  that  the  trustee  has 
not  exercised  a  personal  discretion,  but  has  delegated  his 
duty  to  an  agent,  as,  for  instance,  if  he  purchase  from  an 
agent  under  a  general  power  of  attorney ; 8  but  the  deter- 
mination of  the  court  that  a  sale  is  proper  will  protect 
him.  Where  the  sale  is  a  breach  of  trust,  the  purchaser 
will  be  liable  not  only  for  the  purchase  price,  but  also  for 
damages ;  and  he  cannot  compel  the  trustee  to  carry  out 
a  contract  that  is  a  breach  of  trust,  since  equity  would  not 
compel  the  trustee  to  do  wrong,9  but  he  may  get  damages 
at  law  from  the  trustee  individually  for  the  breach  of  the 
contract.10 

Application  of  the  Purchase  Money.  —  The  general 
rule  is,  that  where  the  settlor  or  court  has  intrusted  the 

1  See  supra,  p.  32.     As  to  acquiescence,  see  infra,  p.  176. 

2  French  v.   Westgate,  71  N.  H.,  510;  McLenegan  v.  Yeiser,  115 
Wise.  304. 

»  Infra,  p.  142.  *  Oliver  v.  Court,  8  Price,  127, 165. 

5  Cassell  v.  Ross,  33  111.   244 ;  Ord  v.  Noel,  5  Madd.  438 ;  Third 
Nat.  Bank  v.  Lange,  51  Md.  138. 

6  Fritz  v.  City  Trust  Co.  72  App.  Div.  (N.  Y.)  532. 

7  Dickinson  v.  N.  Y.  Biscuit  Co.,  211  111.  46. 

8  Supra,  p.  57.  9  White  v.  Cuddon,  8  Cl.  &  Fin.  766. 
10  Mortlock  v.  Buller,  10  Ves.  Jr.  292. 


APPLICATION  OF  THE  PURCHASE  MONEY     71 

funds  to  the  trustee,  as  for  instance  where  the  invest- 
ment requires  time  and  discretion,1  or  if  he  has  a  general 
power  of  sale,2  the  purchaser  need  not  see  to  the  applica- 
tion of  the  purchase  money.  If  the  sale  is  by  order  of 
court,  he  need  not  see  to  the  application  of  the  purchase 
money  unless  required  to  do  so  by  the  decree;8  but  if 
the  funds  are  to  be  applied  in  a  particular  manner  at  a 
definite  time,  or  if  he  knows  that  the  trustee  intends  to 
misapply  them,  he  will  be  liable  if  he  neglects  seeing 
that  they  are  properly  applied,  as,  for  instance,  where 
the  trustee  took  a  note  and  discounted  it  for  his  own 
benefit.4 

If  the  purchaser  has  paid  in  such  manner  that  the  funds 
might  be  properly  invested,5  he  is  not  liable;  but  where 
the  sale  is  irregular  two  trustees,  for  instance,  acting 
where  there  are  three 6  or  if  he  pays  in  an  improper  man- 
ner, so  that  he  has  notice  of  the  contemplated  breach  of 
trust,  he  is  liable  for  it.7 

In  England,  and  many  of  our  States,  he  is  exempted  by 
statute  from  seeing  to  the  application  of  the  funds.8 

Pledge  or  Mortgage. — The  trustee  has  no  power  to 
pledge  or  mortgage  the  trust  property  incidental  to  his 

1  Wormeley  v.  Wormeley,  8  Wheat  421. 

2  Lowell,  Transfer  of  Stock,  §  77: 

8  Coombs  v.  Jordan,  3  Bland,  284 ;  Wilson  v.  Davisson,  2  Rob.  ( Va.). 
334,  412  ;  Perry,  §  798. 

4  Third  Nat.  Bank  v.  Lange,  51  Md.  138. 

6  Keaue  v.  Robarts,  4  Madd.  332,  356. 

6  Fritz  v.  City  Trust  Co.,  72  App.  Div.  (N.  Y.)  532. 

'  Pell  v.  De  Win  ton,  2  De  G.  &  J.  13  ;  Wormeley  v.  Wormeley,  1 
Brock,  U.  S.  C.  C.  330;  S.  C.,  8  Wheat.  421.  Whole  subject  treated 
in  Underbill,  356,  n.  Barroll  v.  Forman,  88  Md.  188. 

8  Code  Ala.  (1896),  §  1039;  Civ.  Code  Cal.  (1903),  §  2244;  Rev. 
Stat.  Ind.  (1894),  §  3399 ;  Gen.  Stat.  Kan.  (1897),  ch.  113,  §  9  ;  Ky.  Stat. 
(1903)  §§4707,  4846;  Comp.  Laws  Mich.  (1897),  §  8850;  Rev.  Stat 
Mo.  (1899),  §4588;  Rev.  Laws  Minn.  (1894),  §3260;  Code  N.  Dak 
(1895),  §4227;  Wise.  Stat.  (1898),  §2092;  Rev.  Stat.  N.  Y.  (1901), 
pp.  3028-9,  §§  84,  88. 


72  PLEDGE   OR   MORTGAGE 

office,1  and  the  power  has  not  been  usually  given  him  by 
the  settlement  or  by  the  legislature;  but  of  late  years  this 
power  has  been  more  frequently  given  to  enable  the  trus- 
tee to  improve  the  real  estate.2 

In  the  absence  of  statute,  the  court  will  not  order  a 
pledge  or  mortgage  unless  it  is  essential-  to  carry  out  the 
purposes  of  the  trust,8  and  in  such  cases  the  authority  is 
really  an  implied  one  given  by  the  instrument.4 

If  the  trustee  has  power  to  "  sell  and  dispose  of"  the 
property,  he  will  have  an  implied  power  of  mortgage,8 
and  it  is  said  that  where  a  trustee  has  a  power  of  sale,  he 
will  also  have  the  power  to  pledge ; 6  but  the  better  opin- 
ion seems  to  be  that  a  mere  power  of  sale  does  not  confer 
the  power  to  pledge.7  The  law  cannot  be  evaded  by  sell- 
ing to  a  man  of  straw  and  allowing  him  to  mortgage  and 
then  repurchasing.8 

The  same  remarks  that  apply  to  the  execution  of  a 
power  of  sale  apply  to  this  power,  except  that,  as  this 
power  is  more  unusual,  the  pledgee  will  be  holden  to  more 
care  than  a  purchaser.9 

If  the  trustee  have  a  power  to  mortgage,  he  may  give  a 
power  of  sale  mortgage,  although  he  has  no  power  to 
sell;10  since  without  such  a  power  of  sale  the  mortgage 
would  be  unmerchantable,  and  he  will  take  by  implication 

1  Potter  v.  Hodgman,  81  App.  Div.  (N.  Y.)  233 ;  Tattle  v.  First 
Nat.  Bk.  187  Mass.  533. 

2  Mass.  Rev.  Laws  (1902),  ch.  147,  §  18;  Rev.  Stat.  N.  Y.  (1901), 
p.  3028,  §  85. 

3  U.  S.  Trust  Co.  v.  Roche,  41  Hun  (N.  Y.),  549;  Boon  v.  Hall,  76 
App.  Div.  (N.  Y.)  520. 

*  Miller  v.  Redwine,  75  Ga.  130  ;  Roberts  v.  Hale,  124  la.  296. 
8  Waterman  v.  Baldwin,  68  Iowa,  255 ;  "  Manage  and   Control," 
Ely  v.  Pike,  115  111.  App.  284. 

"6  Lowell,  Transfer  of  Stock,  §  75. 

7  Loring  v.  Brodie,  134  Mass.  453  ;  Mansfield  v  Wardlow,  91  S.  W. 
859  (Texas  1906). 

8  Griswold  v.  Caldwell,  65  App.  Div.  (N.  Y.)  371. 

9  Lowell,  Transfer  of  Stock,  §  75. 

10  Bridges  v.  Longman,  24  Beav.  27 ;  Re  Chawuer's  Will.  8  L.  R 
Eq.  569. 


PARTITION   AND   EXCHANGE  73 

the  power  to  give  a  merchantable  mortgage,  or  one  in  the 
usual  form.1 

Partition  and  Exchange.  —  A  partition  or  exchange 
can  be  made  by  express  authority  in  the  instrument,  or 
they  may  be  indirectly  effected  under  an  ordinary  power 
of  sale  and  reinvestment,2  although  a  power  of  sale 
and  a  power  to  sell  and  exchange  do  not  include  a 
partition.8 

If,  however,  the  power  of  sale  is  restricted  to  sales  for 
cash,4  or  the  reinvestment  is  restricted,  the  partition  or 
exchange  could  not  be  made  in  this  way.5 

Leasing.  —  The  trustee  has  the  power  to  lease  the  real 
estate  as  a  general  power  incidental  to  his  office,  for  such 
terms  as  are  customary,  since  it  is  his  duty  to  get  the 
customary  return  from  the  property.6 

These  leases  are  binding  on  the  estate  for  their  whole 
term,  even  though  the  trust  may  terminate  during  the 
term  of  the  lease,  and  the  remainderman  is  bound  by 
them ; 7  but  if  the  trust  must  terminate  at  a  given  time,  as, 
for  instance,  on  A's  becoming  of  age,  the  trustee  has  no 
power  to  make  a  lease  extending  beyond  that  time,  and 
any  lease  made  by  a  trustee  beyond  his  power  will  ter- 
minate with  his  estate,  and  will  not  bind  the  remain- 
derman. 

A  trustee  has  no  power  to  make  a  lease  to  begin  at  a 
future  day,8  nor  to  bind  the  estate  by  a  covenant  of  re- 

1  Lewin,  p.  472. 

a  McQueen  v.  Farquhar,  11  Ves.  Jr.  467. 

8  Bradshaw  v.  Fane,  3  Drew,  534. 

*  Borel  v.  Rollins,  30  Cal.  408. 

6  Cleveland  v.  State  Bank,  16  Ohio  St.  236. 
8  Greason  v.  Keteltas,  17  N.  Y.  491. 

7  Greason  v.  Keteltas,  ubi  supra  ;  Kent's  Commentaries,  vol.  iv. 
pp.   106-108.     The  statute  law  was  at  one  time  otherwise  in  New 
York,  but  now  accords  with  the  text.     Weir  v.  Barker,  104  App.  Div. 
(N.  Y.)  112. 

8  Sinclair  v.  Jackson,  8  Cow.  543,  581. 


74  PARTITION   AND   EXCHANGE 

newal  which  will  extend  the  whole  term  beyond  the  term 
for  which  he  has  power  to  lease,  but  may  make  reasonable 
covenants  of  renewal  to  the  same  extent  as  he  might 
lease.1 

It  is  often  difficult  to  determine  what  is  a  customary 
term,  and  it  is  a  question  of  fact  in  each  case  to  be  ascer- 
tained by  careful  inquiry,  and  must  necessarily  differ 
somewhat  according  to  the  location  and  the  character  of 
the  property  let.2 

Twenty  years  has  been  considered  a  reasonable  term 
for  business  property,  and  farming  property  is  often  let 
on  even  a  longer  term.  There  is  one  case  where  a  lease 
of  ninety-nine  years  was  approved,  but  the  circumstances 
were  peculiar.3 

A  trustee  may  not  make  a  building  lease,  because,  al- 
though such  leases  may  be  in  one  sense  of  the  word  cus- 
tomary, they  do  not  fall  within  the  class  of  leases  which 
are  covered  by  the  power  incidental  to  the  office. 

In  a  building  lease,  part  of  the  rent  is  the  consideration 
of  the  tenant's  improving  the  property,  and  these  im- 
provements, which  do  not  benefit  the  lessor  until  the  end 
of  the  term,  accrue  entirely  to  the  remainderman,  but  are 
paid  for  by  the  life  tenant  by  the  use  of  the  property  at  a 
less  rent  during  his  life. 

All  these  rules  may  be  modified  by  the  provisions  of 
the  trust  instrument,  giving  the  trustee  a  special  power 
to  lease  which  supersedes  the  general  power  he  has  by 
virtue  of  his  office;  as  the  trustee  will  then  be  acting 
under  a  special  power  he  must  conform  exactly  to  its 
terms.4  If  the  trustee  be  given  a  power  to  lease  for  a 
specified  number  of  years,  any  term  less  will  be  a  good 


1  Newcomb  v.  Keteltas,  19  Barb.  608;  Bergengren  v.  Aldrich,  139 
Mass.  259. 

8  Newcomb  v.  Keteltas,  19  Barb.  608. 

8  Black  v.  Ligon,  Harp.  Eq.  205. 

*  The  court  allowed  a  longer  lease  than  the  will  ex  necessitate. 
Marsh  v.  Read,  184  111.  263. 


PARTITION   AND   EXCHANGE  —  TO   SUE   AND  DEFEND     75 

execution  of  the  power,1  and  if  he  exceeds  that  term  the 
lease  will  be  good  to  the  extent  of  the  authority.2 

If  the  beneficiaries  have  acquiesced  in  an  improper 
lease,  and  received  the  rents  for  a  long  time,  they  will 
not  be  heard  to  object;  but  this  is  merely  a  matter  of 
remedy  against  them,  and  does  not  make  the  lease  valid 
if  invalid,  as  the  beneficiary  has  no  right  to  make  or  un- 
make leases.8 

The  trustee  will  be  personally  liable  on  the  covenants  in 
a  lease  unless  there  be  an  express  provision  to  the  con- 
trary, and  as  a  covenant  of  quiet  enjoyment  is  implied  in 
every  lease,  the  matter  of  what  risks  he  assumes  should 
be  carefully  considered.4 

To  Sue  and  Defend.  —  The  trustee  has  the  duty  of 
gathering  in  and  protecting  the  trust  property ;  hence  he 
has  power  to  sue  for  it  or  for  any  damage  to  it,  and  to 
defend  suits  in  which  it  is  involved,  or  in  which  he  is  in- 
volved as  trustee,6  and  to  employ  counsel  and  incur  all 
necessary  expenses  at  the  expense  of  the  trust  fund, 
whether  successful  or  not  in  the  litigation,  unless  he  has 
been  improvident  or  unwise.  These  expenses  are  al- 
lowed, not  only  in  cases  directly  affecting  the  property, 
but  also  where  the  trustee  has  acted  with  reasonably  good 
faith  in  attempting  to  protect  the  beneficiary  himself;  as, 
e.g.,  where  he  has  attempted  though  unsuccessfully  to 
have  him  adjudged  insane.6 

If  the  trust  fund  is  insufficient,  he  may  require  in- 
demnity. 

All  the  trustees  must  join  or  be  joined  in  equitable 
suits,  or  in  actions  at  law  growing  out  of  ownership  of  the 
trust  property,  but  contracts  being  personal  liabilities  of 

1  Isherwood  v.  Oldknow,  3  M.  &  S.  382. 
8  Powcey  i'.  Bowen,  1  Ch.  Ca.  23. 
8  Kent  Com  107 ;  Black  v.  Ligon,  Harp.  Eq.  205. 
*  Supra,  p.  29.  6  Supra,  p.  28. 

6  Chester  v.  Rolfe,  4  DeG.,  M.  &  G.  798 ;  supra,  p.  35 ;  Nelson  v. 
Duncombe,  9  Beav.  211. 


76  TO   SUE   AND   DEFEND 

the  several  trustees,  the  individual  trustee  who  made  the 
contract  may  be  sued  alone.1  The  beneficiaries  need  not 
be  joined,2  unless  they  are  not  adequately  represented 
by  the  trustees ;  but  they  should  be  notified  of  a  suit  hos- 
tile to  their  title.8 

The  demand  of  one  trustee  is  sufficient,  and  notice  to 
one  trustee  is  sufficient,  but  neither  the  admissions  of  one 
of  several  trustees,4  nor  the  erroneous  representations  of 
one  of  several  trustees,  will  bind  his  co-trustees  or  the 
estate.6  A  compromise  of  one  of  several  trustees  will 
not  bind  the  estate.6 

The  admissions  of  the  beneficiary  will  not  defeat  the 
trustee's  title.7 

The  trustee  may  compromise  or  submit  doubtful  cases 
to  arbitration,8  and  in  some  jurisdictions  trustees  are 
empowered  by  statute  to  compromise  or  submit  to  ar- 
bitration with  the  approval  of  the  court.9  A  court 
of  equity  would  have  the  same  power  where  there  is  no 
statute. 

The  trustee  should  never  compromise  a  suit  unless  it  is 
decidedly  for  the  benefit  of  the  trust  estate,10  and  unless 
his  right  is  doubtful,  and  the  result  of  litigation  dubious, 
and  in  compromising  a  claim  he  should  show  a  strong 
probability  that  it  could  not  be  recovered  in  full.11 

1  Diamond  v.  Wheeler,  80  App.  Div.  (N.  Y.)  58. 

2  Generally,  but  expressly  by  statute  in  many  jurisdictions.    Supra, 
p.  28. 

8  Mackey's  Adm'r  v.  Coates,  70  Pa.  St.  350. 

*  Vandever's  Appeal,  8  Watts  &  S.  405. 

*  Low  v.  Bouverie,  3  Ch.  D.  (1891),  82. 

6  Stott  v.  Lord,  31  L.  J.  Ch.  391  ;  Boston  v.  Bobbins,  126  Mass.  384. 

7  Pope  v.  Devereux,  5  Gray,  409. 

8  Cbadbourn  v.  Chadbouru,  9  Allen,  173. 

9  Mass.  Rev.  Laws  (1902)  ch.   148,  §  13;   Gen.  Stat.  Conn.  (1902), 
§348;  Code  Ga.  (1895)  §§3429,3430;  Gen.  Laws  R.I.  (1896),  ch.  208, 
§§  13,  18;  Rev.  Stat.  Me.  (1903)  ch.  70,  §  8.     Such  statutes  held  con- 
stitutional.    Clarke  v.  Cordis,  4  Allen,  466. 

10  Ellig  v.  Naglee,  9  Cal.  683. 

11  Ames,  494,  n.    Infra,  p.  102,  as  to  duties  in  such  matters. 


TO   CONTRACT  77 

* 

To  Contract.  —  If  the  trustee  has  the  power  to  do  the 
act  which  he  contracts  to  do,  he  may  bind  the  trust 
estate  in  his  hands,  and  in  those  of  his  successor  by  his 
express  contract.1 

He  cannot  bind  the  beneficiary.2 

The  trustee  is  bound  personally  unless  he  expressly 
provides  that  he  shall  not  be  bound,8  and  if  he  is  not 
bound,  no  one  is  bound  by  the  contract,4  although  the 
trust  property  given  as  security  may  be  held  as  e.  g., 
where  the  trustee  mortgages  the  trust  property,  but  ex- 
empts himself  from  liability  on  the  note.8 

If  the  trustee  having  the  power  to  contract  expressly 
provides  that  the  trust  estate  shall  be  liable,6  or  the  con- 
tract is  such  a  one  as  would  be  implied  by  law,  such  as  a 
contract  to  pay  for  repairs,  or  beneficial  improvement  to 
the  trust  property,  the  trust  estate  will  be  held  and  an 
action  at  law  will  lie  against  the  survivor  or  successor.7 
Thus  a  trustee  with  power  of  sale  can  make  a  contract  for 
a  sale  which  can  be  specifically  enforced,8  but  he  has  no 
power  to  give  an  option  for  sale  at  a  distant  date,  since 
he  cannot  decide  in  advance  that  the  circumstances  will 
justify  the  sale  when  the  time  comes.9  So,  also,  where 
the  trustee  is  authorized  to  continue  the  testator's  busi- 
ness,10 or  in  those  States  where  he  is  given  the  powers  of 

1  Bushong  v.  Taylor,  82  Mo.  660 ;  Poindexter  v.  Buswell,  82  Va. 
507  ;  Durkin  v.  Langley,  167  Mass.  577 ;  Wylly  v.  Collins,  9  Ga.  223. 

8  Everett  v.  Drew,  129  Mass.  150. 

8  Taylor  v.  Davis,  110  U.  S.  330;  Hadlock  v.  Brooks,  178  Mass. 
425,  p.  438 ;  Mayo  v.  Moritz,  151  Mass.  481.  Supra,  p.  28. 

4  Hussey  v.  Arnold,  185  Mass.  202. 

6  Shoe  &  Leather  Nat.  Bank  v.  Dix,  123  Mass.  148. 

«  Mulrein  v.  Smillie,  25  App.  Div.  (N.  Y.)  135;  New  v.  Nicoll,  73 
N.  Y.  127  ;  Underhill,  346,  n. 

'  Whittier  v.  Child,  174  Mass.  36;  Chatham  v.  Rowland,  92  N.  C. 
340;  Mannix  v.  Purcell,  46  Ohio  St.  102,  pp.  117,  147. 

8  Yerkes  v.  Richards,  170  Pa.  St.  347. 

9  In  re  Armory  Board,  60  N.  Y.  S.  882. 

10  Mason  v.  Pomeroy,  151  Mass.  164 ;  Packard  v.  Kingman,  109  Mich- 
497 ;  North  American  Coal  Co.  v.  Dyett,  7  Paige,  9 ;  Wadsworth  v 
Arnold,  24  R.  I.  32;  Roberts  v.  Hale,  124  la.  296. 


78  TO   CONTRACT 

a  general  agent1  he  may  bind  the  funds  invested  in  the 
business,2  and  if  the  authority  is  broad  enough  even  the 
general  assets  of  the  estate.8 

Describing  himself  "  as  trustee  "  is  not  in  itself  such 
an  express  provision  as  will  ordinarily  exempt  the  trustee 
from  personal  liability  under  the  contract,  or  bind  the 
trust  estate.4 

The  general  rule  under  which  the  creditor  reaches  the 
assets  of  the  trust  estate  is  that  he  succeeds  to  the  trus- 
tee's right  of  indemnity  from  it.5  Therefore  his  remedy 
is  in  equity.6  The  ultimate  liability  cannot  be  settled  in 
a  suit  at  law 7  nor  could  execution  issue  against  the  trust 
effects  on  a  judgment  against  the  trustee.8 

The  theory  on  which  recourse  to  the  trust  assets  is  al- 
lowed makes  a  material  difference.  If  the  creditor  must 
reach  the  trust  assets  through  the  trustee's  right  to  in- 
demnity, he  is  then  subject  to  all  equities  or  counter 
claims  which  the  trust  estate  has  against  the  trustee,9 
and  he  would  then  be  obliged  to  make  good  any  default  of 
the  trustee  or  pay  his  debt  to  the  trust  before  receiving 
payment.  The  law  seems  to  be  settled  thus  in  England.10 


1  Civ.  Code  S.  Dak.  §  1642;   Kev.  Code  N.  Dak.  (1895)  §  4289; 
Civ.  Code  Cal.  (1903)  §  2267. 

2  Burwell  v.   Mandeville's  Ex'or,   2   How.  560;    Smith   v.  Ayer, 
103  U.  S.  320,  p.  330;   Janes  v.  Walker,  103  U.  S.  444. 

8  Packard  v.  Kingman,  109  Mich.  497  ;  North  American  Coal  Co. 
v.  Dyett,  7  Paige,  9;  Wadsworth  v.  Arnold,  24  R.  L  32;  Roberts 
v.  Hale,  124  la.  296;  Mason  v.  Pomeroy,  151  Mass.  164. 

4  Shoe  &  Leather  Nat.  Bank  v.  Dix,  123  Mass.  148 ;  Taylor  v.  Davis, 
1 10  U.  S.  330.  Supra,  p.  28. 

6  In  re  Johnson,  15  Ch.  Div.  548  ;  Dowse  v.  Gorton,  40  Ch.  DSv.  536  ; 
Connally  v.  Lyons,  82  Texas,  664 ;  Mitchell  v.  Whitlock,  121  N.C.  166  ; 
Mulrein  v.  Smillie,  25  App.  Div.  (N.  Y.)  135. 

8  Mason  v.  Pomeroy,  151  Mass.  164. 

7  Hampton  v.  Foster,  127  Fed.  468 ;  Diamond  v.  Wheeler,  80  App. 
Div.  (N.  Y.)  58;  Foote  v.  Cotting,  80  N.  E.,  600  ( Mass.  1907 ). 

8  Odd  Fellows  Hall  Assn.  v.  McAllister,  153  Mass.  292,  p.  297. 

9  Cases  cited  in  notes  4  and  5. 

10  In  re  Johnson,  15  Ch.  Div.  548 ;  Dowse  v.  Gorton,  40  Ch.  Div.  536. 


MAINTENANCE   AND   SUPPORT  79 

In  this  country  the  law  seems  to  be  still  unsettled.  l  In 
Georgia,  the  creditor  was  allowed  to  go  directly  against 
the  trust  assets  in  a  suit  in  equity,2  and  in  Vermont,  in  a 
similar  suit  which  seems  to  go  to  the  extreme  limit:8  the 
trustees  being  out  of  the  jurisdiction,  the  creditor  was  al- 
lowed a  lien  on  the  trust  effects  for  repairs.4 

Maintenance  and  Support.  — The  trustee  has  a  general 
power  incidental  to  his  office  to  maintain  and  support  his 
beneficiary.  The  power  is  coextensive  with  the  duty, 
which  is  treated  elsewhere.5 

He  very  commonly  also  has  a  special  power  given  him 
to  apply  the  income  of  the  property  to  the  maintenance 
and  support  of  the  beneficiary,  instead  of  paying  it  to 
him  directly,  the  object  being  to  enable  the  beneficiary  to 
enjoy  the  property  in  spite  of  his  creditors.  The  extent 
to  which  a  valid  power  of  this  kind  can  be  granted  is 
treated  later.6 

This  special  power  is  usually  discretionary  to  the  fullest 
extent,  the  trustees  being  given  the  power  to  select  the 
persons  to  whom  the  income  is  to  be  paid  or  to  accumu- 
late it  in  their  discretion. 

In  such  a  case  none  of  the  possible  recipients  is  en- 
titled to  anything,  or  has  any  real  interest  in  the  trust ; 7 
and  so  long  as  the  trustee  applies  the  income  within  the 
limits  assigned,  the  court  will  not  inquire  into  his  motives 
or  revise  his  acts. 8 

If,  however,  he  is  prejudiced  and  cannot  fairly  exercise 
the  power,  he  may  be  removed  from  his  office  of  trustee, 
and  this  is  the  only  remedy  the  beneficiary  will  have,  and 
he  is  interested  to  that  extent.9 

1  Mason  v.  Pomeroy,  151  Mass.  164,  p.  167. 

3  Wylly  v.  Collins,  9  Ga.  223.  8  Underbill,  346,  347,  n. 

*  Field  u.  Wilbur,  49  Vt.  157. 

6  Infra,  p.  79 ;  supra,  pp.  61,  62.        6  Infra,  pp.  136  et  seq. 
J  But  see  below.  8  Supra,  pp.  61,  62. 

•  Wilson  v.  Wilson,  145  Mass.  490.    But  it  has  been  held  that  the 
court  can  compel  the  trustee  to  act  or  execute  the  trust  itself.  Blythe  v. 
Green,  38  Atl.  Rep.  743  (N.  J.  Ch.).    Discussed  supra,  pp.  61,  62. 


80  MAINTENANCE   AND   SUPPORT 

In  such  trusts  the  court  considers  that  the  power  should 
be  exercised  primarily  for  the  support  of  the  beneficiary,1 
but  it  will  only  interfere  to  remove  a  trustee  who  acts 
from  caprice  or  mere  whim,  or  from  improper  and  selfish 
motives,  instead  of  discretion  and  judgment,  and  not  to 
revise  his  acts.2 

So,  too,  a  power  is  often  expressly  given  to  apply  such 
part  of  the  principal  as  either  the  trustee,  or  in  many 
cases  as  the  beneficiary,  may  deem  necessary  for  his  com- 
fort and  support.8  The  amount  spent  by  whoever  has 
the  power  of  deciding  what  is  needed  "  must  be  founded 
on  a  reasonable  judgment,  dealing  with  existing  facts  and 
reasonable  anticipations  of  the  future,  and  having  a  due 
regard  for  the  purposes  for  which  the  power  was  given, 
and  also  for  the  rights  of  those  whose  interests  are  in- 
juriously affected  by  its  exercise";4  and  an  exercise  of 
such  a  power  to  draw  all  the  funds  out  of  the  trust  so  as 
to  effect  a  revocation  is  not  a  good  exercise  of  the 
power,  and  void.5 

The  general  power  to  support  a  beneficiary  incapable 
of  acting  for  himself  is  also  in  a  large  measure  discre- 
tionary in  its  execution,  and  where  exercised  reasonably 
will  not  be  reviewed  by  the  court,6  although  in  some 
jurisdictions  the  court  claims  the  power  to  review  the 


1  May  v.  May,  109  Mass.  252. 

2  Wilson  v.  Wilson,  145  Mass.  490,  492.     This  rule  is  weakened. 
Supra,  p.  55. 

'  Brown  v.  Berry,  71  N.  H.  241. 

*  Barker,  J.,  in  Lovett  v.  Farnham,  169  Mass.  1,6;  Brown  v.  Berrjr, 
vt  supra.  Supra,  pp.  62,  63. 

6  Same  case,  and  cases  cited  ;  Reade  v.  Continental  Trust  Co. 
48  App.  Div.  (N.  Y.)  632.  Supra,  p.  63. 

6  Bradlee  r.  Andrews,  137  Mass.  50;  Hills  v.  Putnam,  152  Mass. 
123 ;  Collister  v.  Fassitt,  163  N.  Y.  281 ;  Greene  v.  Smith,  17  R.  I.  28. 
In  this  last  case  income  was  payable  to  a  woman  "  for  her  use  "  as 
support,  and  the  court  held  that  the  trustees  must  exercise  a  sound 
discretion  in  paying  her  such  reasonable  amounts  as  she  could  spend 
for  that  purpose. 


MAINTENANCE   AND   SUPPORT  81 

trustee's  action,1  and  it  will  interfere  where  the  trustee 
makes  no  payments  at  all.2 

In  the  case  of  an  infant,  where  the  question  arises  as 
to  spending  any  part  of  the  principal,  it  is  more  prudent 
to  take  the  direction  of  the  court;  as  although  it  may 
authorize  an  expenditure  of  principal  it  is  said  that  it 
will  not  ratify  one;8  but  in  those  jurisdictions  where  the 
courts  give  the  trustee  a  large  discretion  it  would  prob- 
ably ratify  any  expense  it  would  have  authorized.4 

The  interest  of  the  beneficiary,  and  not  the  accumula- 
tion of  income  for  the  benefit  of  the  remainderman  is  the 
chief  consideration,6  and  the  trustee  may  provide  such 
comforts  and  luxuries  as  are  suitable  to  the  condition  in 
life  of  the  beneficiary,  and  he  is  capable  of  enjoying;  as, 
for  instance,  making  a  home  for  his  father  or  mother ; 8 
keeping  a  horse;7  or  providing  expensive  farm  buildings 
or  gifts  to  charity  where  the  fortune  is  ample.8  Where 
the  insane  life  tenant  is  represented  by  a  guardian,  he  is 
entitled  to  the  whole  income,  not  merely  to  what  is  needed.9 

If  there  are  more  beneficiaries  than  one  entitled  to  sup- 
port, the  question  whether  they  are  entitled  to  eqnal 
support,  or  whether  the  trustee  may  apportion  among 
them  according  to  their  needs,  is  to  be  determined  by  the 
intention  of  the  maker  of  the  trust  as  gathered  from  the 
instrument. 

If  the  income  is  settled  on  a  class  of  persons  whose  cir- 
cumstances are  the  same  10  or  if  an  equal  division  ol 

1  Owens  v.  Walker,  2  Strob.  Eq.  289  ;  McKnight  v.  Walsh,  23  N.  J. 
Eq.  136.     Supra,  pp.  62,  63. 

2  Collins  v.  Servereon,  2  Del.  Ch.  324;  Aldrich  v.  Aldrich,  12  R.  L 
141.     Supra,  p.  62.  8  Ga.  Code  (1895),  §  3185. 

*  Williams  v.  Smith,  10  R.  I.  280,  283. 
8  May  v.  May,  109  Mass.  252. 
6  McKnight  v.  Walsh,  23  N.  J.  Eq.  136. 
1  Owens  v.  Walker,  2  Strob.  Eq.  289. 

8  Langton  v.  Brackeubury,  2  Colly.  446. 

9  Gasquet  v.  Pollock,  1  App.  Div.  (N.  Y.)  512. 

10  Stephenson  v.  Norris,  107  N.  W.  Rep.  343  (Wise.  1906).  Supra, 
p.  62. 

6 


82   MAINTENANCE  AND  SUPPORT  —  MISCELLANEOUS 

property  in  general  was  intended,1  the  amount  expended 
must  be  equal. 

If  there  is  sufficient  income,  and  one  beneficiary  needs 
a  larger  expenditure  than  the  others,  the  trustee  should 
take  the  largest  amount  actually  expended  and  make  up 
to  those  whose  needs  are  not  so  great,  by  setting  aside 
for  those  individuals  a  sufficient  sum  to  bring  the  amount 
distributed  to  them  up  to  the  largest  amount  expended, 
and  only  the  balance  will  be  added  to  principal. 

If,  however,  there  is  an  express  or  implied  intention  to 
give  the  trustee  the  power  to  expend  the  income  accord- 
ing to  the  needs  of  the  several  beneficiaries,  he  must  as- 
certain those  needs,  expend  accordingly,  and  accumulate 
the  whole  balance.2 

Miscellaneous.  —  Besides  the  general  powers,  and  com- 
mon special  powers  above  treated,  trust  instruments  often 
contain  other  special  powers  too  numerous  to  treat,  es- 
pecially as  the  mode  of  execution  is  generally  carefully 
provided  for  by  the  instrument,  and  also  because  they 
are  governed  by  the  general  principles  set  forth  above. 

In  England  a  power  of  revocation  will  be  inserted  in  a 
voluntary  settlement,  and  its  absence  is  ground  to  set  it 
aside;  but  such  is  not  the  law  in  America,8  even  where 
the  special  motive  for  creating  the  trust  has  disappeared.4 
A  power  of  drawing  the  principal  as  needed  for  support 
will  not  authorize  the  drawing  of  all  the  principal,  so  as 
to  effect  a  revocation  of  the  trust.6 

Powers  to  appoint  a  successor  in  office  or  to  terminate 
the  trust  are  not  infrequent. 

1  Williams  v.  Bradley,  3  Allen,  270 ;  Jones  v.  Foote,  137  Mass.  543  ; 
Jackman  v.  Nelson,  147  Mass.  300;  Harte  v.  Tribe,  18  Beav.  215. 

2  In  re  Coleman,  39  Ch.  D.  443. 

8  Taylor  v.  Buttrick,  165  Mass.  547 ;  Lawrence  v.  Lawrence,  181 
El.  248. 

4  Keyest>.  Carleton,  141  Mass.  45;  Brown  v.  Mercantile  Trust  Co., 
87  Md.  377.  See,  contra,  Chestnut  Nat'l  Bank  v.  Fidelity  Ins.  &  Trust 
Co.,  186  Pa.  St.  333  (disapproved  in  preceding  case). 

6  Supra,  p.  80. 


DUTIES  —  SUPPORT  83 

IV.    DUTIES. 

The  trustee's  duty  is  to  carry  out  the  provisions  of  the 
trust  instrument,  hence  he  must  make  himself  thoroughly 
familiar  with  its  provisions  and  follow  them  out  accurately. 

As  we  have  already  seen,  the  trustee  is  the  absolute 
owner  of  the  property,  except  in  so  far  as  his  ownership 
is  modified  by  his  duties  to  the  beneficiaries.  These 
duties  are  not  limited  to  the  disposition  of  the  property 
for  his  benefit,  but  an  individual  in  assuming  the  charac- 
ter of  a  fiduciary  or  trustee  for  another  immediately 
enters  into  a  status  with  respect  to  that  other  which  modi- 
fies their  relationship  as  individuals,  and  places  on  the 
trustee  a  large  number  of  duties  to  his  beneficiary  outside 
of  and  beyond  the  questions  affecting  the  trust  property. 

His  duties  are  to  all  the  beneficiaries  collectively,  and 
he  is  bound  to  treat  them  all  with  equal  justice. 

First,  we  will  treat  of  the  duties  which  a  trustee  owes 
his  beneficiary  aside  from  the  management  of  the 
property. 

Support.  —  If  the  beneficiary  is  under  a  disability,  it 
is  the  trustee's  duty  to  see  that  he  has  proper  care  and 
support.  If  insane,  it  is  his  duty  to  have  him  declared 
so;  l  and  if  incapable  for  any  reason,  to  maintain  and 
support  him  out  of  the  funds  which  he  would  otherwise 
pay  over  to  him,  and  accumulate  any  balance  not  needed.2 
He  cannot  use  funds  the  person  would  not  be  entitled  to 
otherwise,8  and  an  act  of  the  legislature  authorizing  him 
to  use  the  principal  for  the  support  of  the  life  tenant  is 
unconstitutional  and  void.4 

1  Nelson  v.  Buncombe,  9  Beav.  211.     Supra,  p.  75. 

8  As  to  discretion  in  deciding  amount  of  support,  see  pp.  61,  62 
supra. 

8  Lee  v.  Brown,  5  Ves.  Jr.  362,  but  now  in  England  by  statute 
may  advance  support  to  an  infant  contingently  interested  (Re  George, 
5  Oh.  D.  837)  where  an  estate  becoming  vested  he  would  be  entitled  to 
the  accumulations. 

*  Ervine's  Appeal,  16  Pa.  St.  256. 


84  SUPPORT 

The  support  is  to  be  taken  wholly  from  income  except 
in  a  case  where  the  property  is  absolutely  vested  in  the 
beneficiary,  in  which  case  the  court  may  make  an  allow- 
ance from  principal ; l  but  the  trustee  should  not  do  so 
without  an  order  from  the  court.2 

The  matter  of  support  is  often  complicated  by  the  fact 
that  others  may  have  a  duty  to  support  the  beneficiary, 
in  which  case  the  trustee  is  excused. 

Thus,  if  the  parent  be  alive  and  able  to  furnish  sup- 
port adequate  to  the  minor's  condition  and  fortune,  the 
trustee  should  not  contribute  except  under  order  of  court ; 8 
if  the  parent  cannot  furnish  sufficient  support,  the  trustee 
should  contribute  sufficient  to  make  reasonable  support, 
taking  all  sources  together,  and  if  there  are  two  funds  to 
be  drawn  from  they  should  be  taxed  ratably.  Where, 
however,  a  fund  is  given  to  trustees  to  use  in  their  discre- 
tion for  the  support  of  an  insane  person,  they  may  take 
all  his  support  from  that  fund  irrespective  of  his  other 
means  : 4  and  if  the  settlement  be  on  the  father  as  trustee 
to  support  his  child,  the  settlement  being  in  a  certain 
sense  for  the  benefit  of  the  father,  he  may  take  the  whole 
support  from  the  trust  funds  irrespective  of  his  own 
ability ; 5  and  if  the  income  is  to  be  paid  to  a  father  or 
mother  for  the  support  of  a  child,  they  are  entitled  to  it 
so  long  as  they  support  the  child,  but  the  court  will  see 
that  they  do  so.6 

It  is  the  duty  of  a  father,  or  a  mother  no^t  under  cover- 
ture,7 to  support  a  minor  child  who  is  not  taken  from  his 

1  Brown  v.  Berry,  71  N.  H.  241. 

2  Supra,  pp.  79,  80.     In  re  Bostwick,  4  Johns.  Ch.  100. 

8  McKnight  v.  Walsh,  23  N.  J.  Eq.  136;  Perry,  §  612;  Flint,  §  190; 
Lewin,  653 ;  Underhill,  350. 

4  Hills  ?>.  Putnam,  152  Mass.  123. 

6  Nat'l  Valley  Bank  v.  Hancock,  100  Va.  101. 

6  Chase  v.  Chase,  2  Allen,  101 ;  Loring  v.  Loring,  100  Mass.  340. 

7  Dedham  v.  Natick,  16  Mass.  135;  Gleason  v.  Boston,  144  Mass., 
25 ;  Wilkes  v.  Rogers,  6  Johns.  566 ;  Ailing  v.  Ailing,  52  N.  J.  Eq.  92 ; 
Underhill,  350,  n. 


SUPPORT  —  CONTRACTS   WITH   BENEFICIARY  85 

or  her  care;  but  a  stepfather  or  a  mother  under  cov- 
erture has  no  such  duty. *  A  husband  must  support  his 
wife. 

The  trustee  must  handle  the  funds  himself,  and  not 
delegate  the  management  of  the  funds  for  support  to 
another,  as  e.  g.,  he  must  not  delegate  the  duty  to  the 
father.2 

Under  the  existing,  statute  law  married  women,  except 
in  their  relations  with  their  husbands,  generally  have  the 
same  status  as  other  individuals,8  and  the  trustee  has  no 
peculiar  duty  to  them  except  in  preventing  the  husband 
from  reducing  his  wife's  property  to  possession,  in  which 
case  he  should  protect  her  rights. 

Contracts  with  Beneficiary. — Where  the  beneficiary 
is  of  full  legal  capacity,  the  trustee  may  deal  with  and 
make  binding  contracts  with  him,  even  concerning  the 
trust  property.  He  cannot,  as  in  dealing  with  a  stranger, 
take  advantage  of  his  peculiar  knowledge  or  position, 
either  for  his  own  profit  or  for  the  profit  of  the  other 
beneficiaries ; 4  but  if  he  gains  any  advantage  in  the  trans- 
action he  will  be  under  the  burden  of  showing  that  the 
beneficiary  was  fully  informed  and  thoroughly  understood 
the  matter,  and  that  he,  the  trustee,  has  taken  no  advan- 
tage of  his  position  or  influence,  or  the  transaction  may 
be  disaffirmed.5  In  other  words,  any  transaction  with  a 
beneficiary  in  which  the  trustee  receives  a  benefit  is  pre- 

1  Ailing  v.  Ailing,  52  N.  J.  Eq.  92. 

2  Flint,  §  191 ;  but  Perry,  §  620,  says  he  may  exercise  sound  dis- 
cretion in  paying  to  parent  or  guardian,  and  the  same  rule  applies 
in  payments  to  the  beneficiary  himself.     See  Greener.  Smith,  17  R.  I. 
28.     Supra,  80,  n.  6. 

8  Taylor  v.  Buttrick,  165  Mass.  547;  Jackson  v.  Von  Zedlitz,  136 
Mass.  342. 

4  Lindington  v.  Patton,  111  Wise.  208. 

6  Bowker  v.  Pierce,  130  Mass.  262  ;  Field  v.  Middlesex  Banking  Co, 
77  Miss.  180 ;  Barrett  v.  Hartley,  2  L.  R.  Eq.'.789.  But  the  beneficia. 
ries'  creditors  cannot  disaffirm.  Bresee  v.  Bradfield,  99  Va.  331. 


86      CONTRACTS  WITH   BENEFICIARY — GOOD   FAITH 

sumed  to  be  fraudulent,  and  the  burden  of  proving  it 
otherwise  falls  on  him.1 

The  rule  is  the  same  whether  the  transaction  concerns 
the  trust  proper  or  property  outside  of  the  trust. 

If,  for  instance,  a  trustee  sells  to  the  trust  fund  a 
mortgage  for  more  than  the  property  is  worth,  and  after- 
wards induces  his  beneficiary,  relying  on  his  representa- 
tions, to  allow  him  to  buy  in  the  property  on  foreclosure 
to  prevent  loss,  the  beneficiary  may  disaffirm  the  purchase 
and  require  the  trustee  to  take  the  property  and  refund 
the  money,  if  he  acts  as  soon  as  he  discovers  the  mis- 
representations.2 

The  trustee  may  accept  professional  employment  from 
the  beneficiary,  as  that  of  attorney,  broker,  or  counsel  in 
other  than  trust  matters,  but  if  he  takes  compensation 
must  show  that  he  has  not  used  his  position  to  obtain  the 
employment.8 

It  is  said  that  a  trustee  may  not  receive  a  gift  from  a 
beneficiary,4  but  with  the  limitations  specified  as  to  other 
transactions,  there  seems  to  be  no  reason  why  a  sponta- 
neous present,  especially  if  of  small  value,  should  not  be 
given  and  accepted.  Still  such  transactions,  being  subject 
to  suspicion,  are  better  wholly  omitted. 

\ 

Duties  in  Exercise  of  Office  —  Good  Faith.  —  A  trus- 
tee is  bound  to  exercise  the  utmost  good  faith  in  all  the 
concerns  of  the  trust,6  whether  it  be  in  dealing  with  the 
trust  property  itself,  or  with  the  beneficiary  in  matters 
concerning  the  trust.  His  fealty  is  to  the  trust,  and  all 
his  acts  must  be  governed  by  strict  loyalty  to  it  and  the 


1  Cal.  Civ.  Code  (1903),  §  2235;  Kev.  Civ.  Code,  So.  Dak.  (1903) 
§  1624;  Rev.  Code  N.  Dak.  (1895)  §  4271.     Supra,  32. 

2  Nichols,  Appellant,  157  Mass.  20. 

8  As  to  professional  employment  in  trust  matters,  see  supra,  p.  34. 

4  Vaughton  v.  Noble,  30  Beav.  34. 

5  Cal.  Civ.  Code   (1903),§  2228;  Kev.  Civ.  Code,  So.  Dak.  (1903) 
§  1617. 


GOOD   FAITH  —  HIS  DUTY  IS   ALL  TO   THE  TRUST       87 

interests  of  the  beneficiaries ; l  and  any  act  which  is  not 
in  the  interest  of  the  beneficiaries  is  a  breach  of  trust. 

He  cannot  make  any  profit  out  of  the  use  of  the  trust 
property,  or  get  any  advantage,  direct  or  indirect,  by  its 
purchase  or  sale.2  Even  where  the  trustee  honestly 
believes  that  the  intention  of  the  maker  of  the  trust  was 
otherwise,  he  must  do  nothing  to  prejudice  the  interest  of 
his  beneficiaries,8  and  in  a  suit  for  a  conveyance  he  cannot 
set  up  a  superior  title.4  He  must  not  divulge  a  defect  in 
the  title,  nor  admit  the  adverse  claim  of  another,5  nor 
deny  the  power  of  the  settlor  to  create  the  trust,6  or  set  up 
an  adverse  claim  himself,  or  accept  an  adverse  employ- 
ment.7 He  must  yield  all  controversy;  if  he  has  an 
adverse  interest  when  he  accepts  the  trust 8  or  if  he  sub- 
sequently buys  one  he  cannot  set  it  up  against  the  trust.9 
If  he  accidentally  acquire  an  adverse  interest  which  he 
intends  to  assert,  he  must  resign  the  trust,  unless  the 
beneficiaries  are  informed  and  consent  to  his  retention  of 
the  office.10 

He  must  not  come  in  competition  with  the  trust  estate,11 
and  if  he  has  demands  both  as  an  individual  and  trustee  12 
against  the  same  person,  he  must  appropriate  any  sum  he 
collects  ratably  between  the  two  claims.18 

His  Duty  is  All  to  the  Trust.  —  In  the  management 
of  the  fund,  the  trustee's  duty  is  wholly  to  his  trust ;  and 

1  Perry,  §  434. 

2  Hayes  v.  Hall,  188  Mass.  510.     Supra,  p.  32. 

3  Ellis  v.  Barker,  L.  R.  7  Ch.  104 ;  Reid  v.  Mullins,  48  Mo.  344. 

4  Neyland  v.  Bendy,  69  Tex.  711. 

5  Thomas  v.  Bowman,  30  111.  84. 

6  Sterling  v.  Sterling,  77  Minn.  12. 

7  Benjamin  v.  Gill,  45  Ga.  110 ;  Civ.  Code  Cal.  (1903),  §  2230. 

8  His  bondsman  is  liable  for  money  he  owes  the  trust  when  he  ac- 
cepts it.     Bassett  v.  Fidelity  &  Deposit  Co.,  180  Mass.  210. 

9  M'Clanahan  v.  Henderson,   2  A.  K.  Marsh.  (Ky.)  388;  12  Am. 
Dec.  412 ;  Bourquin  v.  Bourquin,  110  Ga.  440. 

10  Stone  v.  Godfrey,  5  DeG.,  M.  &  G.  76.        u  Supra,  p.  34. 
w  Rev.  Civ.  Code,  So.  Dak.  (1903)  §  1621. 
w  Scott  v.  Ray,  18  Pick.  360. 


08  TRUST   CANNOT    BE    DELEGATED 

he  must  do  all  that  can  be  honestly  done  for  the  further- 
ance of  its  interests. 

In  the  case  of  a  demand  he  must  press  it  by  suit,  unless 
it  is  evident  that  nothing  can  be  gained. 

In  defending  suits  he  should  take  all  good  ground  that 
he  lias,  and  claim  all  exceptions.1 

It  is  not  his  duty  to  appeal  from  an  adverse  decision, 
though  he  may  do  so  in  exercise  of  a  sound  discretion 
and  under  good  advice ;  but  if  a  decision  in  his  favor  is 
appealed  from  he  must  maintain  his  suit,2  and  he  should 
not  compromise  nnless  it  is  clearly  for  the  benefit  of  the 
trust ; 8  and  if  he  have  security,  he  must  not  release  it,  or 
part  of  it,  without  adequate  consideration.4 

Trust  cannot  be  Delegated.  —  In  theory  a  trust  is  a 
personal  confidence,  that  is  to  say,  the  beneficiary  has  a 
right  to  compel  the  individual  who  is  trustee  to  perform 
the  trusts  himself.  The  trustee  cannot  turn  over  the 
whole  trust  to  another,  as  is  exemplified  in  the  case  of 
Winthrop  v.  Attorney  General,6  where  the  trustees  of  a 
fund  for  the  support  of  a  museum  at  Harvard  College 
were  refused  leave  to  turn  the  fund  over  to  the  general 
fund  of  the  College,  the  income  to  be  accounted  for  to 
them.6  Nor  can  the  trustee  delegate  any  part  of  his 
duties  or  powers  ;  his  duty  is  to  exercise  the  powers  and 
discretion  himself,'  and  if  he  permits  another  to  act  in  his 
place  he  does  so  at  his  peril,8  for  the  law  does  not  recog- 
nize a  passive  trustee.9  Thus,  where  two  trustees  divided 
the  trust  and  each  managed ,  a  half,  one  was  held  liable 

1  Amer.  &  Eng.  Encyc.  Law,  vol.  27,  pp.  155-157. 

2  Wood  v.  Burnham,  6  Paige,  513. 
8  Lewin,  p.  666. 

*  Supra,  pp.  75,  76,  as  to  conduct  of  suits. 
6  128  Mass.  258. 

6  See  also  Morville  i;.  Fowle,  144  Mass.  109. 

7  Graham  v.  King,  50  Mo.  22.     Supra,  pp.  56,  57. 

8  Bostock  v.  Floyer,  L.  R.  1  Eq.  36  ;  Jones's  Appeal,  8  Watts  &  S 
143. 

9  Clark  v.  Clark,  8  Paige,  153. 


TRUST  CANNOT   BE   DELEGATED  89 

for  the  half  lost  by  the  other.1  But  where  the  duties 
cannot  be  jointly  exercised  they  may  make  a  reasonable 
apportionment  of  them,  and  neither  will  be  liable  for  the 
loss  of  funds  or  neglect  of  the  other.2 

In  practice,  it  is  usual  for  one  trustee  to  assume  the 
active  management  of  the  property.8 

As  noted  above  (p.  56),  trustees  are  joint  tenants;  ac- 
cordingly one  of  them  alone  may  demand  and  receive  in- 
terest, rents,  dividends,  and  some  other  sums  of  money. 
In  the  absence  of  any  knowledge  of  unfitness,  the  other 
trustees  may  permit  one  of  their  number  to  exercise  these 
powers,  and  will  not  be  liable  if  he  abuses  them.4 

It  would  be  impossible,  and  it  is  generally  unreasonably 
inconvenient  for  all  the  trustees  to  join  in  the  active  man- 
agement of  the  property;  hence,  provided  that  all  the 
trustees  exercise  a  general  supervision  over  the  trust 
affairs,8  and  "fulfil  the  purposes  of  the  trust  with  ordi- 
nary care  and  diligence, " 6  they  may  permit  one  of  the 
number  to  take  the  general  custody  and  management  of 
the  trust  estate.7  They  would  not  be  justified  in  placing 
the  property  wholly  beyond  their  control,8  or  in  leaving  the 
funds  for  an  unreasonable  time  in  the  hands  of  their  co- 
trustee  9  or  neglecting  to  exercise  a  reasonable  oversight 
over  his  actions.10 

A  distinction  should  be  drawn  between  the  manage- 
ment of  income  and  principal,  —  it  being  customary  and 


1  Graham  v.  Austin,  2  Gratt.  273. 

3  State  v.  Guilford,  18  Ohio,  500;  Kilbee  v.  Sneyd,  2  Molloy,  186. 
8  Jones's  Appeal,  8  Watts  &  S.  143.    Infra,  p.  148. 

4  State  v.  Guilford,  18  Ohio,  500;  In  re  Mallon's  Estate,  43  Misc., 
Rep.  (N.  Y.)  569.     Infra,  p.  149. 

6  Jones's  Appeal,  8  Watts  &  S.  143. 

8  Dover  v.  Denne,  3  Ont.  L.  R.  664  ;  Rev.  Civ.  Code  So.  Dak.  (1903), 
§  1637  ;  Rev.  Code  N.  Dak.  (1895),  §  4284. 

7  Colbnrn  v.  Grant,  181  U.  S.  601  ;  Perry,  §  409. 

8  Evans  Estate,  2  Ashmead,  470.    Infra,  pp.  104,  105,  148. 

9  Infra,  p.  103. 

l°  Jones's  Appeal,  8  Watts  &  S.  143.    Infra,  p.  149. 


90  TRUST   CANNOT  BE  DELEGATED 

probably  justifiable  for  one  trustee  to  collect  and  disburse 
the  former,  but  not  the  latter ;  and  a  trustee  who  allowed 
his  cotrustee  to  collect  a  large  amount  of  principal  and 
let  it  lie  unmolested  in  his  hands  would  be  liable  for  its 
loss.1 

An  agent  may  be  allowed  to  collect  dividends  and  rents, 
and  keep  the  books,  and  in  general  act  for  the  trustees 
wherever  there  is  a  moral  or  legal  necessity  to  employ  an 
agent.2  Such  a  necessity  exists  where  the  ordinarily  pru- 
dent man  of  business  would  employ  an  agent  in  his  own 
affairs,  as,  for  example,  employing  a  stockbroker  to  pur- 
chase stocks,  and  paying  for  them  through  him.8  In  such 
cases  the  trustee  will  not  be  liable  for  the  default  of  the 
agent,  but  only  for  his  care  in  selecting  him ; 4  as  again, 
for  instance,  a  trustee  who  has  employed  a  good  convey- 
ancer is  not  responsible  for  a  flaw  in  the  title  which  he 
overlooked.6 

The  employment  of  one  of  the  trustees  or  an  agent  in 
such  cases  is  not  a  delegation  of  the  trust,  but  is  the  law- 
ful act  of  the  trustees  by  the  hand  of  another.  The 
difference  between  a  delegation  of  the  trust  itself  and 
the  performance  of  a  ministerial  act  by  an  attorney  may 
be  illustrated  in  the  case  of  a  sale  of  land. 

The  trustees  could  not  delegate  the  matter  of  making  the 
sale  —  that  is,  determining  the  price,  terms,  and  whether 
it  was  better  or  not  to  sell  or  adjourn  the  sale  —  to  one  of 
the  trustees,6  but  they  might  authorize  one  of  the  trustees 
to  execute  and  deliver  the  deed  for  them,  after  they  had 
determined  the  matter  of  the  sale. 

Again,  the  trustees  could  not  give  an  agent  or  one  of 

1  Infra,  pp.  103,  149. 

2  Ex  parte  Belchier,  Arab.  219. 

8  Speight  v.  Gaunt,  22  Ch.  D.  727. 

4  Lewin,  268,  n. ;  Speight  v.  Gaunt,  22  Cb.  D.  727 ;  Ex  parte 
Belchier,  Arab.  219.  Supra,  p.  57. 

6  Contra,  Hopgood  v.  Parkin,  1 1  Eq.  74.  But  see  criticism  on  this 
case,  Underbill,  p.  300,  §  8. 

6  Graham  v.  King,  50  Mo.  22.    Supra,  p.  55. 


TRUST  CANNOT  BE  DELEGATED  —  ACCOUNTS    91 

their  number  a  general  power  of  attorney  to  sell  stocks ; 
but  they  might  give  a  special  power  to  transfer  a  par- 
ticular stock.  In  the  first  instance  the  trustees  are  dele- 
gating their  power  to  sell,  which  is  a  delegation  of  the 
trust;  in  the  latter  case  they  are  employing  an  agent  to 
make  a  transfer,  which  is  a  purely  ministerial  act.1 

Accounts.  —  If  the  trust  is  a  testamentary  one,  the 
trustee  will  be  required  to  file  an  inventory  (by  statute  in 
practically  all  the  States)  soon  after  his  appointment. 

A  trustee  must  keep  accurate  and  separate  accounts  of 
the  trust,  which  should  be  always  open  to  the  inspection 
of  the  beneficiary,  even  if  kept  in  a  book  with  other 
accounts.2  If  the  account  is  inaccurate  or  obscure,  the 
trustee  is  the  loser,  since  everything  will  be  taken  against 
him.8 

A  court  of  equity  may  compel  any  trustee  to  account,4 
but  as  a  general  rule  the  jurisdiction  is  given  to  probate 
courts  by  statute. 

A  testamentary  trustee  is  entitled  to  a  periodical 
settlement  of  accounts  with  his  beneficiaries,  and  to  a 
formal  discharge  or  settlement  in  court,  but  he  is  not 
entitled  to  a  release  under  seal.6 

In  England,  under  the  trustee's  relief  act,  any  trustee 
can  account  and  pay  money  into  court ; 6  but  in  the  ab- 
sence of  statute  in  America  there  seems  to  be  no  general 
jurisdiction  in  the  court  to  compel  the  beneficiary  to  come 
in  and  settle  his  account.7 


1  Supra,  p.  57. 

2  Hopkinson  v.  Burghley,  L.  R.  2  Ch.  447. 

8  Landis  v.  Scott,  32  Pa.  St.  495 ;  Blauvelt  v.  Ackermann,  23  N.  J. 
Eq.  495. 

*  Weaver  v.  Fisher,  110  111.  146;  Mass.  Pub.  Stat.  (1882),  ch.  144, 
§  15 ;  Report  of  Commissioners  to  revise  Public  Statutes  (1901),  p.  1311, 
n.  1,  said  passim;  Hayes  /•.  Hall,  188  Mass.  510,  p.  512. 

6  King  v.  Mullins,  1  Drew.  308.     Infra,  p.  142. 
8  In  re  Wright's  Trusts,  3  K  &  J.  419,  421. 

7  But  see  Hayes  v.  Hall,  ubi  supra. 


92         ACCOUNTS — FORM  OF  ACCOUNT 

All  the  trustees  must  join,  and  if  one  trustee  allows 
another  to  render  a  fraudulent  account,  he  is  liable  as 
a  party  to  it.1 

All  the  beneficiaries  are  necessary  parties.2 

If  the  trustee  holds  by  appointment  of  the  court,  he 
will  be  required  to  settle  his  account  in  court  at  stated 
intervals.8  In  such  cases  he  need  not  render  any  other 
account,  and  the  beneficiary  must  come  into  court  to 
settle. 

If  the  trustee  does  not  hold  under  appointment  of  court, 
he  should  settle  his  accounts  yearly,  or  as  often  as  the 
settlement  requires. 

If  a  trustee  dies,  the  survivors  will  settle  the  account ; 
and  if  a  sole  trustee  dies,  his  executor  or  administrator  may 
do  so,  although  he  does  not  succeed  him  in  the  trust.4 

Form  of  Account.  —  The  trustee's  account  is  intended 
to  show  the  condition  of  the  estate,  and  does  not  involve 
the  trustee's  personal  account  with  the  remainderman  or 
with  other  trusts.5 

The  account  must  show  every  transaction  in  detail,  and 
include  a  list  of  property  in  the  hands  of  the  trustee.  He 
must  charge  himself  with  each  item  received,  and  credit 
himself  with  every  item  lost,  expended,  or  paid  out,  and 
ask  to  be  allowed  for  the  saine.  In  accounting  to  a 
court  he  need  not  include  in  his  account  real  estate,  or 
the  rents  from  real  estate  which  lies  in  another  juris- 
diction,6 but  only  the  surplus  brought  into  the  jurisdiction 
of  the  court.7 

The  court  in  which  the  account  is  settled  will  prescribe 
the  form  in  which  the  account  will  be  made  ;  but  in  every 

1  Infra,  p.  149. 

2  Leonard  v.  Pierce,  94  App.  Div.  (N.  Y.)  266.    Infra,  p.  94. 
8  Provided  for  by  statute  in  most  States. 

*  Munroe  v.  Holmes,  13  Allen,  109. 
6  Dodd  v.  Winship,  133  Mass.  359. 

6  Morrill  v.  Morrill,  1  Allen,  132. 

7  Clark  v.  Blackington,  110  Mass.  369.     Infra,  p.  192. 


FORM   OF   ACCOUNT  93 

trust  account  there  should  be  at  least  six  schedules,  viz. : 
income  received,  income  paid,  additions  to  principal,  de- 
ductions from  principal,  principal  on  hand,  and  changes 
in  investments  consisting  of  debtor  and  creditor  sides. 

The  income  received  should  contain  all  the  sums  to 
which  the  life  beneficiary  is  entitled,  and  the  income  paid 
all  the  charges  against  him. 

The  changes  in  investment  should  contain  on  the  debtor 
side  all  the  amounts  received  as  principal  for  the  remain- 
derman, beginning  with  any  balance  of  cash  on  hand; 
and  on  the  credit  side,  all  the  amounts  paid  out  as  prin- 
cipal ;  and  these  two  accounts  should  balance. 

If  there  has  been  any  gain  to  the  principal,  as  by  in- 
come added,  or  sale  of  a  security  above  its  cost,  or  the 
recovery  of  an  amount  not  shown  in  the  inventory  or 
previous  accounts,  it  should  appear  in  the  schedule  of 
additions  to  principal. 

The  schedule  of  deductions  from  principal  will  be 
made  of  similar  items  of  loss  and  of  any  charges 
against  the  remainderman. 

The  schedule  of  principal  on  hand  should  enumerate 
each  item  of  the  trust  property  with  its  cost,  either 
actual  or  appraised,  carried  out;  and  the  schedule  of 
the  current  year  will  always  equal  that  of  the  previous 
year,  after  adding  the  schedule  of  additions  and  deduct- 
ing the  schedule  of  deductions. 

The  form  of  account  given  above  is  that  used  in  the 
courts  of  many  States,  but  in  some  States  the  schedules 
of  changes  and  additions  and  deductions  are  not  put  in, 
but  all  amounts  received  as  principal  are  charged,  and 
all  amounts  paid  out  of  principal  are  credited,  and  the 
difference  in  amount  between  these  two  schedules  will  be 
the  difference  between  the  schedule  of  the  current  and 
preceding  year. 

The  account  should  be  accompanied  by  proper  vouchers 
for  all  payments.1 

1  Willis  v.  Klymer,  66  N.  J.  Eq.  284. 


94  EFFECT  OF  AN   ACCOUNT 

Effect  of  an  Account.  —  The  settlement  of  trustees' 
accounts  in  court  is  generally  governed  by  the  statutory 
law,  which  varies  with  the  various  jurisdictions  ;  and  the 
statutes  of  the  jurisdiction  where  the  account  is  settled 
should  be  carefully  studied.  In  general  an  account  set- 
tled in  court  is  final l  as  to  all  persons  who  are  parties  to 
the  proceedings,2  but  not  as  to  other  persons.8  Minors 
may  be  represented  by  a  guardian  ad  litemf  and  statutes 
commonly  exist  by  which  persons  unborn  or  unascertained 
can  be  similarly  represented.6 

Such  a  settlement  can  only  be  set  aside  to  correct  a 
fraud  or  mistake,6  and  cannot  be  questioned  in  a  collateral 
preceding,  either  at  law  "  or  in  equity.8 

If  an  account  is  corrected,  all  persons  interested  will 
get  the  benefit  of  the  correction.9 

Probate  courts  are  peculiar,  as  they  have  jurisdiction 
over  the  property  itself  as_  well  as  the  parties.  Hence 
judgments  of  a  probate  court  do  not  depend  on  the 
parties  to  the  suit,  but  are  final  as  to  the  disposition  of 
the  matter  in  controversy,10  provided  the  notice  required 
by  the  court  is  given,  and  that  notice  is  sufficient  to 
cover  the  constitutional  requirements  of  ' '  due  process 
of  law." 

In  Indiana  and  Massachusetts,  by  peculiar  statute  law, 
when  an  account  is  filed  in  the  probate  court  all  former 
accounts  of  the  same  accountant  may  be  reopened,  except 

1  Amory  v.  Lowell,  104  Mass.  265,  p.  272 ;  Stetson  v.  Bass,  9  Pick. 
26,  29;  In  re  Elting,  93  App.  Div.  (N.  Y.)  516. 

2  Foster  v.  Foster,  134  Mass.  120. 

8  Kendall  v.  DeForest,  101  Fed.  R.  167. 

*  Jenkyns  v.  Whyte,  62  Md.  427. 

6  Mass.  Rev.  Laws  (1902),  ch.  150,  §  22.    A  statute  seems  to  be 
necessary.     Morse  v.  Hill,  136  Mass.  60,  p.  67. 

«  Dodd  v.  Winship,  144  Mass.  461 ;  Aldrich  v.  Barton,  138  Cal.  220. 

7  Parcher  v.  Russell,  11  Cush.  107. 

8  Lever  v.  Russell,  4  Cush.  513. 

•  Bennett  v.  Peirce,  188  Mass.  186.     Infra,  pp.  159-160. 

10  Loring  v.  Steineman,  1  Met.  204 ;  Minot  v.  Purrington,  1 90  Mass. 
336;  Harris  v.  Starkey,  176  Mass.  445. 


EFFECT  OF   ACCOUNT  —  EXPENSE   OF   ACCOUNTING   95 

as  to  matters  which  have  been  heard  and  determined ; l 
and  as  to  these  matters  the  accounts  may  be  reopened  to 
correct  a  fraud  or  mistake,  but  not  to  correct  the  judgment 
of  the  court.2  Notice  is  construed  to  mean  "  actual  no- 
tice," and  a  settlement  is  only  conclusive  in  the  case  of  a 
final  account.8 

A  successor  in  a  trust  is  not  accountable  for  the  faults 
of  his  predecessor,  yet  as  the  state  of  the  funds  may  be 
affected  by  his  act,  the  successor's  duty  may  require  him 
to  investigate  his  predecessor's  acts,  reopen  his  accounts, 
and  recover  from  him  or  his  estate.4 

If  a  beneficiary  had  an  estate  in  possession  and 
has  assented  to  the  account,6  or  has  neglected  for  a 
long  period  to  enforce  his  rights,  the  court  will  not 
help  him,  although  there  is  no  statute  of  limitations  to 
bar  him.6 

If  the  account  is  not  settled  in  court,  the  settlement  is 
final  in  so  far  as  the  account  is  assented  to  by  persons 
interested  and  able  to  act  for  themselves,  and  may  be 
reopened  even  by  them  to  correct  mistakes  of  fraud,7  but 
in  so  far  as  fairly  made  is  binding  on  all  who  take  part 
in  it,  even  though  it  cover  a  breach  of  trust.8 

The  Expense  of  Accounting.  —  It  is  the  trustee's  duty 
to  make  up  an  account ;  therefore  ordinary  compensation 
covers  the'making  up  of  the  account,  but  any  court  charges 
will  be  borne  by  the  trust  estate,  unless  the  trustee  was  at 

1  Foster  v.  Foster,  134  Mass.  120. 

8  Burns's  Annot.  Stat.  Ind.  ( 1901),  §  2559 ;  Mass.  Rev.  Laws  (1902), 
eh.  150,  §  17.  But  see  as  to  Massachusetts,  Acts  1907,  ch.  438. 

8  Parker  v.  Boston  Safe  Deposit  &  Trust  Co.,  186  Mass.  393,  396. 

*  Blake  r.  Pegram,  109  Mass.  541  ;  Bennett  v.  Pierce,  188  Mass. 
186;  Ex  parte  Geaves,  8  DeG.,  M.  &  G.  291;  Kendall  v.  DeForest, 
101  Fed.  R.  167. 

6  Amory  v.  Lowell,  104  Mass.  265. 

6  Infra,  p.  177. 

7  Bassett  v.  Granger,  140  Mass.  183. 

8  Infra,  p.  176;  Amory  v.  Lowell,  ubi  supra. 


96          WHERE   TRUSTEE  IS   IN   DOUBT  AS  TO    DUTY 

fault  in  not  accounting,  in  which  case  he  may  be  ordered 
by  the  court  to  pay  the  costs.1 

"Where  the  Trustee  is  in  Doubt  as  to  his  Duty.  — 
When  a  trustee  is  in  doubt  as  to  his  duty,  he  may  notify 
the  beneficiary  of  his  intended  action,  and  if  he  does  not 
object  he  will  not  be  heard  to  do  so  at  a  later  date ; 2  and 
where  the  beneficiaries  are  of  full  capacity,  although  there 
is  no  obligation  on  him  to  do  so,  yet  it  is  undoubtedly  a 
prudent  plan  for  the  trustee  to  consult  his  beneficiaries 
before  taking  any  important  step,8  but  generally  this 
mode  of  procedure  will  only  protect  the  trustee  against 
the  life  beneficiaries,  and  so  is  incomplete.  If  therefore 
there  is  a  doubt  as  to  what  the  trustee's  duties  are,  he  can 
and  should  apply  to  the  court  for  instructions ; 4  but  he 
cannot  consult  the  court  simply  because  he  is  ignorant 
and  does  not  know  his  duty  or  what  the  law  is.  In  such 
case,  the  court  may  tell  him  to  take  advice,6  and  if  he 
involves  the  estate  in  unnecessary  litigation  he  may  have 
to  pay  costs.  But  where  a  question  arises  as  to  the  proper 
construction  of  the  settlement,  or  a  determination  between 
conflicting  claims  6  is  necessary,  he  may  refer  the  matter 

1  Blake  v.  Pegram,  109  Mass.  541,  558 ;  Chisholm  v.  Hammersley, 
100  N.  Y.  S.  38.     Supra,  p.  35 ;  infra,  p.  142.     In  England,  and  where 
the  trustee  acts  without  compensation,  the  fund  would  bear  the  ex- 
pense of  accounting,  but  the  expense  of  furnishing  an  unnecessary 
account  must  be  borne  by  the  person  requiring  it.     Re  Bosworth,  58 
L.  J.  Ch.  432. 

2  Life  Association  of  Scotland  v.  Siddal,  3  DeG.,  F.  &  J.  58,  74. 
«  Bradby  v.  Whitchurch,  W.  N.  1868,  p.  81. 

4  Generally,  but  by  statute  sometimes.  Rev.  Stat.  Ohio  (1904), 
§  6202;  Pub.  Stat.  N.  H.  (1891),  ch.  198,  §  10;  Holland  Trust  Co. 
v.  Sutherland,  65  App.  Div.  (N.  Y.)  252.  In  Pennsylvania  the  court 
held  that  it  had  no  such  jurisdiction,  but  that  the  result  might  be  reached 
by  a  fictitious  account.  In  re  Morton's  Estate,  201  Pa.  269.  In  Eng- 
land the  trustee  can  apply  to  the  court  for  instructions  on  nearly  any 
question  by  an  order  in  chambers.  Bissell,  The  Duties  and  Liabilities 
of  Trustees,  78. 

6  Greene  v.  Mnmford,  4  R.  I.  313 ;  Underbill,  436,  n. 

«  Hills  v.  Putnam,  152  Mass.  124. 


WHERE   TRUSTEE   IS   IN   DOUBT  AS  TO   DUTY         97 

to  the  court  and  will  be  protected  by  its  determination. 
He  may  ask  its  instructions  as  to  a  compromise,1  sale  or 
investment  of  the  trust  property,2  or  on  such  a  question 
as  the  apportionment  of  a  fund  between  the  life  tenant 
and  the  remainderman,8  as,  for  instance,  a  stock  dividend4 
or  the  apportionment  of  the  expense  of  certain  repairs.5 
In  some  jurisdictions  he  should  consult  the  court  before 
investing.6 

Where,  however,  he  is  given  a  discretionary  power  in 
the  matter,  the  court  will  not  interfere  since  he  is  the 
forum  and  not  it7  Nor  could  he  use  this  method  of  de- 
termining a  question  at  law,  as,  for  instance,  what  is  his 
liability  to  a  creditor  or  for  a  tax  ;8  or  what  his  powers  and 
duties  will  be  under  a  contemplated  reorganization  of  a 
corporation  ;9  nor  if  he  contract  under  order  of  court  will 
he  be  protected  from  personal  liability,  but  will  be  only 
assured  of  indemnity  from  the  trust  fund.10 

No  application  will  be  considered  until  the  question  is  a 
practical  one  and  must  be  decided.  Hence  a  question  as 
to  who  will  be  entitled  in  remainder  cannot  be  asked 
during  the  existence  of  the  life  estate,11  and  the  distribu- 
tion of  a  fund  cannot  be  decided  until  the  cash  is  in 
hand.12 

The  proper  way  to  raise  the  question  is  by  a  bill  for  in- 
structions, and  not  by  a  fictitious  account.18  An  account 

1  Mass.  Rev.  Laws  (1902),  ch.  148,  §  13 ;  Chadbourn  v.  Chadbourn, 
9  Allen,  173. 

a  Wheeler  ».  Perry,  18  N.  H.  307. 

8  Edwards  v.  Edwards,  183  Mass.  581  ;  De  Koven  v.  Alsop,  205  111. 
309.  *  Hemenway  v.  Hemenway,  181  Mass.  406. 

6  Sohier  v.  Eldredge,  103  Mass.  345. 

6  Lowe  v.  Convocation  of  Prot.  Ep.  Church,  83  Md.  409 ;  Peckbam 
v.  Newton,  15  R.  I.  321. 

7  Rutland  Trust  Co.  v.  Sheldon,  59  Vt.  374.     Supra,  p.  77. 

8  Greene  v.  Mumford,  4  R.  I.  313. 

9  Treadwell  v.  Salisbury  Mfg.  Co.  7  Gray,  393. 

w  Infra,  p.  145.  u  Bullard  v.  Chandler,  149  Mass.  532. 

"  Tuttle  v.  Woolworth,  62  N.  J.  Eq.  532. 
w  Lincoln  v.  Aldrich,  141  Mass.  342. 

7 


98      WHAT   MAY   BE   TRUST   PROPERTY  —  POSSESSION 

is  meant  to  show  the  state  of  the  estate,  and  is  not  for 
the  trial  of  disputed  claims.1  All  persons  interested 
should  be  made  parties ;  2  but  when  they  are  very  numer- 
ous and  every  possible  interest  is  adequately  represented, 
the  court  may  proceed  with  less.3  If  the  suit  is  in  the 
probate  court  it  will  be  conclusive  irrespective  of  the 
parties  joined.4 

The  costs  of  all  parties  to  the  proceedings  in  ordinary 
cases  will  be  borne  by  the  principal  of  the  estate,6  but 
if  the  application  was  unnecessary  the  court  may  order 
the  trustee  to  pay  costs,  and  it  may,  in  its  discretion, 
refuse  to  allow  even  the  expenses  of  the  guardian  ad  litem, 
though  such  a  course  is  unusual.6 

V.    MANAGEMENT  OF  FUND. 

What  may  be  Trust  Property. — Any  sort  of  prop- 
erty, real  or  personal,  in  possession  or  reversion,  or  any 
interest,  whether  vested  or  contingent,  which  can  be  as- 
signed, may  be  the  subject  of  a  trust,7  even  though  it  be 
real  estate  outside  of  the  jurisdiction  of  the  court,8  or 
something  not  actually  in  existence,9  or  trade  secret  or 
patent  right,  but  trusts  only  extend  to  property,  and  not 
to  such  things  as  the  performance  of  an  act,  such  as  the 
employment  of  a  particular  person  as  attorney  or  agent.10 

Taking  Possession.  —  On  accepting  a  trust,  it  is  the 
trustee's  duty  to  inquire  into  the  nature  of  the  property 

1  Dodd  v.  Winship,  133  Mass.  359 ;  New  Eng.  Trust  Co.  v.  Eaton 
140  Mass.  532. 

2  Wagnon  v.  Pease,  104  Ga.  417. 

8  Hills  v.  Barnard,  152  Mass.  67.  *  Infra,  p.  143. 

6  Howland  v.  Greene,  108  Mass.  277,  p.  285;  Lowry  v.  Fanners' 
Loan  &  Trust  Co.,  172  N.  Y.  137,  p.  145. 

6  Stevenson  v.  Norris,  107  N.  W.  Rep.  343  (Wise.  1906)  ;  Libby  ». 
Todd,  80  N.  E.  584  (Mass.  1907). 

7  Perry,  §§  67,  68.  •  Massie  v.  Watts,  6  Cranch,  148.  160. 

9  Mitchell  v.  Winslow,  2  Story,  630. 
w  Foster  v.  Elsley,  19  Ch.  Div.  518. 


TAKING  POSSESSION  99 

and  trust  documents.1  If  he  succeeds  a  former  trustee, 
he  must  ascertain  that  he  receives  all  the  property  that 
belongs  to  the  estate,  which  will  involve  the  examination 
of  his  predecessor's  accounts  so  far  as  they  are  open.2 

He  is  not  bound  to  take  the  securities  tendered  him  if 
they  are  improper  investments,  but  may  insist  on  having 
them  converted  into  cash,  or,  at  any  rate,  he  need  only 
take  the  securities  at  their  actual  value  and  then  should 
collect  the  balance  from  the  outgoing  trustee.8  If  he 
takes  the  securities  at  their  inventory  value,  he  will  be 
responsible  for  them  at  that  price. 

The  same  rule  applies  where  he  takes  the  estate  from 
an  executor.  He  must  take  immediate  steps  to  secure 
the  trust  pr6perty  and  properly  invest  it.  He  will  have 
an  equitable  action  against  a  transferee  of  the  legal  title 
made  before  he  became  trustee.4 

Real  Estate.  —  If  the  appointment  is  an  original  one, 
the  will  or  settlement  will  vest  the  title  of  the  real  estate 
in  the  trustee,  and  he  must  see  that  the  instrument  is 
recorded  in  every  jurisdiction  where  there  is  any  land.6 

If  the  trustee  comes  in  the  place  of  a  former  trustee, 
the  estate  may  vest  in  him  by  the  terms  of  the  trust  in- 
strument or  by  statute,  in  which  case  he  must  see  that  he 
is  duly  appointed  or  his  appointment  recorded  in  each 
jurisdiction  where  the  land  lies,6  or  if  there  is  no  pro- 
vision in  the  instrument,  and  he  is  not  appointed  by  a  de- 
cree of  court  vesting  the  property  in  him,  then  he  must 
take  a  conveyance  and  record  it  in  each  jurisdiction. 

Having  acquired  title  he  should  at  once  take  posses- 
sion, actual  or  constructive.  If  the  real  estate  is  let  he 

1  Hallows  v.  Lloyd,  39  Ch.  Div.  686,  691 ;  Underbill,  p.  219. 

2  Supra,  p.  95.     Ex  parte  Geaves,  8  DeG.,  M.  &  G.  291. 

8  In  re  Salmon,  42  Ch.  Div.  351  ;  Thayer  v.  Kinsey,  162  Mass. 
232. 

4  Luring  v.  Salisbury  Mills,  125  Mass.  138. 
6  Hext  v.  Porcher,  1  Strobh.  Eq.  170. 
«  Cogbill  v.  Boyd,  77  Va.  450. 


100  TAKING   POSSESSION 

should  take  constructive  possession  by  compelling  the 
tenant  to  attorn,  or  acknowledge  him  as  his  landlord  and 
agree  to  pay  rent  to  him,  or  if  there  is  no  tenant  he  should 
take  actual  possession  of  the  land. 

If  the  beneficiary  is  in  possession  under  the  terms  of 
the  trust  he  need  do  nothing,  as  the  beneficiary's  posses- 
sion is  constructively  the  possession  of  the  trustee. 

Personal  Property.  —  If  the  trustee  is  an  original  ap- 
pointee under  a  deed,  the  personal  property  will  probably 
be  in  the  hands  of  the  settlor,  and  it,  or  the  evidences  of 
it,  should  be  delivered  to  the  trustee  when  the  settlement 
is  made. 

If  the  trustee  joins  in  a  deed  acknowledging  the  receipt 
of  the  property,  and  does  not  as  a  matter  of  fact  receive 
it,  he  will  be  liable  for  it  as  though  he  had  received  it,  to 
any  person  acting  on  the  face  of  his  receipt. 1 

If  the  trustee  is  appointed  under  a  will,'2  he  may  not  be 
entitled  to  the  personal  property  at  once,  as  until  the 
executors  have  administered  the  estate  they  are  entitled 
to  hold  it ;  and  where  the  same  persons  are  trustees  and 
executors,  until  they  terminate  the  executorship  by  filing 
an  account  crediting  themselves  as  executors  with  the 
trust  property,  and  qualify  as  trustees,  or  do  some  other 
definite  act  showing  a  transfer,  they  will  still  remain 
liable  as  executors  and  will  not  hold  as  trustees.8  "  When 
a  trust  fund  is  to  be  created  by  an  executor  out  of  the 
assets  of  an  estate,  something  more  must  be  done  by  the 
the  executor  in  order  to  impress  the  trust  on  particular 
property  than  to  hold  the  property  with  the  intention  that 
it  shall  constitute  the  trust  fund.  There  must  be  some 
act  of  appropriation  which  transfers  it  to  the  trust  fund 
and  gives  the  beneficiaries  the  right  to  have  it  held  for 
them." 4 

1  Low  v.  Bouverie,  3  Ch.  D.  (1891)  82.     See  infra,  p.  145. 

2  See  supra,  p.  1 1 . 

8  Crocker  v.  Dillon,  133  Mass.  91.     Supra,  p.  14. 

*  Knowlton,  J.,  in  Sheffield  v.  Parker,  158  Mass.  330,  333. 


TAKING    POSSESSION  101 

In  the  case  of  an  incoming  trustee  it  is  his  duty  to  ex- 
amine the  executor's  accounts  and  ascertain  that  he 
obtains  all  the  estate  that  he  is  entitled  to.1 

Although  the  provisions  of  the  trust  instrument  or  de- 
cree of  the  court  may  have  the  force  of  a  written  trans- 
fer, yet  in  the  case  of  personal  property  a  delivery  of  the 
property  itself  or  of  the  evidence  of  it  is  essential,  and  in 
every  case  it  is  desirable  where  the  property  is  such  as 
not  to  pass  by  delivery  simply,  to  have  a  written  transfer 
from  the  former  owner.  But  where  the  property  is  vested 
in  the  new  trustee  by  force  of  statute  or  provision  of  the 
trust  instrument,  he,  and  not  the  former  owner,  is  the 
proper  person  to  transfer.  Where  there  is  no  decree  of 
the  court,  or  no  provision  of  the  trust  instrument  vest- 
ing title,  an  assignment  by  the  holder  of  the  title  is 
indispensable. 

Registered  bonds,  notes,  and  certificates  of  stock  should 
stand  in  the  names  of  all  the  trustees,  and  should  specify 
the  trust  under  which  they  are  held  on  their  face,  so  that 
there  can  be  no  question  as  to  its  identity.  To  describe 
the  holders  as  "  trustees  "  merely  is  not  sufficient,  as  it  is 
not  apparent  to  what  fund  the  stock  belongs,  and  no  well 
advised  purchaser  will  take  a  transfer  of  such  a  stock 
without  further  assurance. 

The  transfer  should  be  made  without  delay  :  on  a  note 
by  indorsement,  and  on  a  stock  certificate  or  registered 
bond  by  indorsement  and  transfer  on  the  books  of  the 
company. 

If  there  is  a  chose  in  action  or  equity,  the  obligor 
should  be  notified  at  once ;  2  as  for  instance  a  bank  ac- 
count, for  although  notice  is  not  necessary  to  complete  the 
title  in  some  jurisdictions,8  a  payment  of  the  claim  or 
other  novation  of  the  security  to  the  previous  holder 
before  notice  will  discharge  the  debtor.4 

All  claims  which  are  due  should  be  called  in,  unless 

1  Infra,  pp.  127,  128.  a  Ames,  327,  n. 

8  Thayer  v.  Daniels,  113  Mass.  129.          *  Infra,  pp.  161-162. 


102  TAKING    POSSESSION 

they  are  such  as  constitute  a  proper  trust  investment; 
and  if  necessary  the  trustee  should  sue  without  delay,  un- 
less he  can  show  that  more  is  to  be  gained  by  forbear- 
ance,1 not  only  for  these,  but  for  any  of  the  trust  property 
which  he  cannot  obtain  on  demand,  and  he  will  have  an 
equitable  suit  for  property,  of  which  the  legal  title  has 
passed  to  a  third  person  by  a  breach  of  his  predecessor  in 
the  trust.2 

Care  and  Custody  of  the  Trust  Property.  —  Assuming 
that  the  trustees  have  got  title,  and  the  property  properly 
into  their  hands,  their  next  duty  is  to  take  proper  care 
of  it 

Real  Estate.  —  The  trustee  should  immediately  insure 
the  real  estate  for  a  reasonable  amount,  should  fence  it  if 
necesssary,  and  put  it  in  a  condition  to  be  let,  and  there- 
after he  must  keep  the  property  insui'ed,8  fenced,  and  in 
repair,  and  pay  the  taxes  on  it. 

If  the  property  is  unimproved  he  may  improve  it  so  as 
to  secure  a  tenant,  but,  in  the  absence  of  special  power 
from  the  trust  instrument  or  court  to  do  so,  he  must  be 
careful  not  to  convert  the  personal  property  of  the  estate 
from  personal  to  real  estate  without  authority  in  doing 
so,  as  by  spending'  any  cash  that  may  be  on  hand  or 
the  proceeds  of  the  sale  of  securities. 

Personal  Property.  —  Trust  chattels  are  usually  meant 
to  be  enjoyed  in  specie  by  the  beneficiary,  and  may  be 

1  Ames,  494,  n.  1. 

2  Loring  v.  Salisbury  Mills,  125  Mass.  138. 

8  Burr  v.  McEwen,  Baldw.  C.  C.  154,  and  Eng.  and  Am.  Encyc.  of 
Law,  vol.  27,  p.  163,  which  states  that  the  trustee  must  insure,  al- 
though unsupported  by  the  cases  cited.  But  Davis,  J.,  in  Insurance 
Co.  v.  Chase,  5  Wall.  509,  514,  and  the  cases  in  general  and  the  Eng- 
lish statute,  Lewin,  p.  314,  and  Perry,  §  487,  all  say  that  a  trustee  may 
insure,  but  under  modern  conditions,  where  every  prudent  man  does 
insure  his  own  risks,  it  would  seem  that  a  trustee  must  insure,  and  he 
is  usually  required  to  do  so  by  well  drawn  trust  instruments. 


CARE  AND  CUSTODY  OF  TRUST  PROPERTY    103 

turned  over  to  him,  and  if  he  uses  them  up,  lets,  or  de- 
stroys them,  the  trustee  will  not  be  liable;  but  the  trustee 
should  require  him  to  sign  an  inventory  when  they  are 
delivered.1 

Where  the  use  of  the  chattels  is  not  given  to  the  bene- 
ficiary, they  should  be  converted  into  money,8  unless  they 
were  to  be  held  unconverted,  in  which  case  the  trustee 
must  keep  the  actual  possession,  and  as  several  persons 
cannot  conveniently  hold  them  they  may  be  left  in  the 
hands  of  one  trustee. 

Money  should  be  deposited  in  a  good  bank  in  the  joint 
names  of  all  the  trustees ;  and  if  it  is  deposited  in  the  in- 
dividual names,  the  trustees  will  be  liable  if  it  is  lost, 
though  without  their  fault,  as  by  a  failure  of  the  bank  or 
otherwise.8 

All  the  trustees  are  responsible  if  they  leave  money  for 
more  than  temporary  purpose  in  the  name  of  one.4  And 
while  it  is  customary  and  probably  justifiable  to  permit 
one  trustee  to  draw  checks  alone  against  an  account 
which  consists  wholly  of  income,  they  should  not  permit 
large  amounts  of  principal  to  lie  in  the  bank  subject  to 
the  draft  of  one  of  their  number.6 

But  one  trustee  may  be  allowed  to  draw  checks  against 
income,  since  it  is  not  unreasonable  to  allow  one  trustee 
to  collect  it.' 

It  was  held  in  a  case  where  there  was  a  dispute,  and 
consequently  the  funds  could  not  be  invested,7  that  the 

i  Dorr  v.  Wainwright,  13  Pick.  328 ;  McDonald  r.  Irvine,  8  C.  D. 
101,  112. 

4  As  to  when  a  conversion  is  proper,  see  infra,  p.  1 05. 

8  In  re  Arguello  97  Cal.  1 96  ;  Ames,  484,  n. ;  Corya  v,  Corya,  1 1 9 
Ind.  593 ;  Civ.  Code  Cal.  (1903),  §  2236,  as  amended  by  Acts  of  1905, 
ch.  615;  Rev.  Civ.  Code  So.  Dak.  (1903),  §  1625;  Rev.  Code  N. 
Dak.  (1895),  §4272. 

*  Monell  v.  Monell,  5  Johns.  Ch.  283  ;  9  Amer.  Dec.  298. 

6  Lewis  v.  Nobbs,  L.  R.  8  Ch.  D.  591 ;  Clough  v.  Dixon,  8  Sim. 
594. 

6  Kilbee  v.  Sneyd,  2  Moll.  186.    Supra,  p.  56. 

7  Ames  v.  Scudder,  11  Mo.  App.  166. 


104         CARE  AND   CUSTODY   OF   TRUST   PROPERTY 

trustees  were  entitled  each  to  hold  half  and  pay  interest 
thereon,  and  one  becoming  insolvent  the  other  was  not 
held  liable,  but  it  is  somewhat  doubtful  whether  this  rule 
can  be  safely  followed ;  it  would  seem  more  appropriate 
to  deposit  the  money  in  a  safe  place  in  the  joint  names. 

Non-negotiable  stocks,  registered  bonds,  notes,  deeds, 
&c.,  may  be  left  in  the  custody  of  one  trustee,1  or  in  case 
of  necessity  or  propriety  in  the  hands  of  an  agent ;  2  as 
for  instance  deeds  could  be  left  with  a  solicitor,  or  stocks 
with  a  stockbroker  who  is  negotiating  a  sale ;  but  if  nego- 
tiable securities  be  left  in  the  hands  of  an  agent  unneces- 
sarily the  trustees  would  undoubtedly  be  liable.8 

Negotiable  securities,  and  partially  negotiable  securities 
such  as  registered  coupon  bonds,  should  be  deposited  in  a 
safe  deposit  vault,  or  where  none  is  convenient  at  a  bank- 
er's in  a  separate  box,  in  the  joint  names  of  all  the  trustees. 
The  question  of  how  far  the  trustees  are  justified  in  allow- 
ing one  of  their  number  to  have  access  to  the  box  alone, 
cannot  be  considered  as  authoritatively  determined.  The 
general  rule,  that  the  trustee  must  use  reasonable  care, 
only  postpones  the  question,  as  the  question  still  remains 
whether  allowing  one  trustee  access  alone  is  reasonable 
care.  Mr.  Justice  Kekewich  in  a  late  case 4  expresses  his 
own  opinion  strongly  that  negotiable  securities  should 
not  be  got  at  without  the  consent  of  the  whole  body ; 
but  Vice-Chancellor  Wood,  in  a  leading  earlier  case,5  said 
that  it  was  too  much  to  say  that  ordinary  prudence  re- 
quires a  box  with  three  keys,  and  this  latter  dictum 
seems  to  accord  more  nearly  with  the  general  usage  in 
this  country.6 

Where  a  bond  could  be  registered,  as  most  bonds  may 
be,  it  would  appear  to  be  the  trustee's  duty  to  have  it 

1  Dyer  v.  Riley,  51  N.  J.  Eq.  124. 

2  Jones  v.  Lewis,  2  Ves.  Sen.  240. 
8  Matthews  v.  Brise,  6  Beav.  239. 

4  Field  v.  Field,  L  R.  1894,  1  Ch.  425. 

6  Mendes  v.  Guedalla,  2  Johns  &  Hem.  259,  278. 

«  In  re  Halstead,  44  Misc.  Rep.  (N.  Y.)  176. 


CARE   AND   CUSTODY   OF   TRUST   PROPERTY         105 

registered  if  he  gives  his  cotrustee  separate  access  to 
the  securities.1  In  that  case  the  coupons  only  remain 
negotiable,  and  as  one  trustee  may  collect  income  alone, 
he  could  be  reasonably  allowed  separate  control  of  these.2 

There  is  no  question  that  a  trustee  who  should  neglect 
for  a  long  time  to  examine  the  securities,  as  for  instance 
for  four  years,8  or  who  should  confide  them  to  his  c6- 
trustee  in  an  unusual  manner,4  would  be  liable. 

In  any  event,  it  would  seem  a  wise  precaution  to 
register  bonds  where  possible,  but  the  trustee  is  not 
bound  to  do  so  where  it  is  not  customary  with  prudent 
men  to  do  so  in  caring  for  their  own  securities.5 

In  general  a  trustee  is  bound  to  take  the  same  care  of 
the  trust  property  which  any  bailee  is  bound  to  take  of  the 
property  put  in  his  charge,  or  such  care  as  a  prudent  man 
would  take  of  his  own.6 

Conversion.  — The  form  in  which  the  property  usually 
exists  at  the  formation  of  the  trust,  in  part  at  least,  is  not 
adapted  to  trust  purposes  ;  but  is  generally  more  adapted 
to  the  needs  of  the  individual  than  to  the  requisites  of 
successive  estates. 

An  individual  may  be  engaged  in  business,  in  a  part- 
nership, or  in  the  management  of  his  property  for  the 
purposes  of  gain,  and  rarely  in  this  country  has  his 
property  permanently  invested  without  some  regard  to 
speculative  value. 

1  Lewis  v.  Nobbs,  L.  R.  8  Ch.  D.  591,  594. 

2  Supra,  p.  56. 

»  Mendes  v.  Guedalla,  2  Johns.  &  Hem.  259,  277. 

4  Matthews  v.  Brise,  6  Beav.  239. 

6  The  principal  reason  for  holding  bonds  unregistered  is  to  avoid 
transfer  taxes,  etc. 

6  In  re  Pothonier  (1900),  2  Ch.  529.  In  this  case  the  court  in- 
structed the  trustees  that  the  bonds  might  be  deposited  with  bankers 
with  authority  to  them  to  cut  coupons,  as  such  was  the  custom  of  pru- 
dent business  men.  There  does  not  seem  to  be  such  a  custom  in  this 
country. 


106  CONVERSION 

Thus  where  the  maker  of  a  trust  transfers  a  partnership, 
business  risk,  speculative  or  unproductive  property,  to  a 
trustee,  or  in  fact  any  property  which  the  trustee  would 
not  be  authorized  to  invest  in  under  the  terms  of  the 
instrument  or  prevailing  law,  he  must  immediately  and 
without  delay  proceed  to  convert  all  such  property  into 
investments  authorized  by  the  terms  of  the  trust,  and 
will  have  the  implied  power  to  do  so.1 

Vacant  land,  even  if  it  have  a  large  prospective  value, 
should  be  converted,  since  trust  property  should  yield 
the  usual  income  to  the  life  tenant.  All  undivided 
estates  should  be  converted,  since  the  trustee  has  not 
the  absolute  control  over  them ;  leaseholds, 2  and  all 
wasting  investments,  such  as  stocks  in  land  companies 
and  mines,  &c.,  in  which  the  principal  is  being  consumed 
in  dividends  to  the  life  tenant,  should  be  converted  into 
trust  investments. 

If  the  trustee  delay  beyond  a  reasonable  time,  he  will 
be  liable  for  any  loss  of  the  property.8  Where  the  time 
within  which  the  conversion  is  to  be  made  is  expressly 
left  to  his  discretion,  he  will  be  protected  in  a  reasonable 
use  of  his  discretion,  but  must  sell  within  a  reasonable 
time.*  The  only  safe  rule  is  to  sell  promptly.6 

On  the  other  hand,  if  the  settlor  has  provided  for  the 
continuation  of  his  business,  or  the  holding  of  his  securi- 
ties, or  if  he  has  left  his  property  prudently  and  perma- 
nently invested,  not  with  a  view  to  speculation,  the  trustee 
should  not  convert  it,  unless  the  investments  are  such  as 
he  is  forbidden  to  make  by  the  terms  of  the  settlement  or 
by  law,6  since  he  is  entitled  to  put  confidence  where  the 

1  Kinmonth  v.  Brigham,  5  Allen,  270 ;  Ames,  491,  n. ;  Howe  v.  Lord 
Dartmouth,  2  White  &  Tudor,  L.  C.  (5th  ed.),  296  and  note;  Brown 
v.  Gallatly,  2  Ch.  App.  751.  Supra,  p.  65. 

8  Minot  v.  Thompson,  106  Mass.  583. 

8  Sculthorp  v.  Tupper,  13  L.  B.  Eq.  232. 

*  Marshall  v.  Caldwell,  125  Mass.  435;  In  re  Smith  (1896),  1  Ch. 
171 ;  In  re  Atkins,  81  Law  T.  (N.  s.)  421,  Ch.  Div. 

5  In  re  Northington,  13  Ch.  Div.  654. 
.  '  Harvard  College  v.  Amory,  9  Pick.  446,  462. 


CONVERSION  107 

settlor  did,  and  the  settlor  has  impliedly  authorized  these 
investments,  and  in  some  jurisdictions  the  trustee  must  go 
so  far  as  to  get  an  order  of  court  to  change  the  property 
from  the  form  in  which  the  testator  left  it.1 

Thus ,  where  the  testator  has  left  bonds  that  will  sell 
for  a  large  premium,2  which  therefore  yield  a  very  small 
return  on  the  money  invested,  the  trustee  need  not  sell 
and  reinvest.  Nor  will  he  be  held  responsible  for  not 
selling  a  stock  at  par,  which  afterwards  became  worth- 
less,8 if  he  used  a  reasonable  discretion  in  the  matter. 

No  conversion  can  be  made  of  property  which  the 
settlor  meant  to  be  enjoyed  in  specie ;  as,  for  instance, 
a  house  for  the  beneficiary  to  live  in,  or  property  to  be 
sold  at  the  end  of  the  life  estate,4  or  household  goods 
and  chattels  meant  for  family  use,6  but  such  intention 
must  be  shown  affirmatively,  as  the  general  rule  is  that 
all  property  is  to  be  converted.6 

Where  specific  real  estate  is  left  of  which  the  beneficiary 
is  to  have  the  rents  for  life,  the  right  to  use  the  property 
in  specie  is  implied ; 7  but  otherwise  where  the  real  estate 
is  not  specified.  So,  also,  where  the  beneficiary  is  to 
have  the  dividends  on  the  property,  enjoyment  in  specie 
is  not  implied,  unless  the  property  yielding  the  dividends 
is  specified.8 

Conversion  of  Real  into  Personal  Property  and  Vice 
Versa.  —  Unless  the  power  be  given  by  the  trust  instru- 
ment, the  trustee  may  not  convert  the  real  property  into 
personal,  or  vice  versa,  the  reason  of  which  seems  to 

1  Conn.  Gen.  Stat.  (1902),  §  255  ;  but  the  distinction  is  doubted. 
Perry,  §  465. 

a  N.  Eng.  Trust  Co.  v.  Eaton,  140  Mass.  532. 
8  Bowker  v.  Pierce,  130  Mass.  262. 

*  Erviue's  Appeal,  16  Pa.  St.  256;  Johns  v.  Johns,  172  III.  472. 
6  See  pages  125  and  175,  176. 

•  Howe  v.  Lord  Dartmouth,  2  White  &  Tndor  L.  C  ,  5th  ed.,  296  ; 
McDonald  v.  Irvine,  8  Ch.  D.  101,  112. 

f  Perry,  §  451.  8  Boys  v.  Boys,  28  Beav.  436. 


108     CONVERSION  OP  REAL  INTO  PERSONAL  PROPERTY 

have  originally  depended  on  the  different  way  in  which 
real  estate  and  personal  property  descend  or  could  be 
disposed  of  by  will.1 

Thus,  the  trustee  must  not  sell  real  estate  and  invest 
in  bonds,  or  buy  real  estate  with  uninvested  funds,  unless 
they  are  the  proceeds  of  a  sale  of  real  estate  ;  for  where 
real  estate  is  sold  by  an  administrator  or  guardian  under 
order  of  court,  the  proceeds  will  be  treated  as  real  estate 
and  not  as  personal ; 2  but  where  the  estate  is  sold  and 
converted  into  personalty  under  order  of  court  by  a  trus- 
tee, it  loses  its  character  as  real  estate.8  If  the  sale  is 
under  a  power  in  the  trust  instrument,  the  intention  of 
the  maker  will  govern  as  to  whether  the  proceeds  shall  be 
considered  as  real  estate  or  converted  into  personalty  by 
his  authority.4 

Under  the  common-law  rule  the  trustee  cannot  use  the 
personal  property  of  the  estate  to  improve  the  real  estate. 
Where  the  testator  left  an  insurance  policy  on  a  building 
which  was  subsequently  burned,  rebuilding  with  the  in- 
surance money  was  held  to  be  a  conversion  ; 5  but  buying 
in  land  to  protect  a  debt  from  great  loss,  although  a  con- 
version, is  an  authorized  conversion,  and  one  that  will  be 
ratified  by  the  court.6  This  rule  is  relaxed  by  statute, 
or  by  practice  in  some  jurisdictions.7 

By  statute  in  many  States,  and  by  equity  jurisdiction 
in  others,  a  court  may  order  a  conversion,8  and  where  it 
does  so,  the  proceeds  of  land  will  not  be  treated  as  real 

1  Perry,  §  605. 

2  Mass.  Rev.  Laws  (1902),  ch.  143,  §  9 ;  Fidler  v.  Higgins,  21  N.  J. 
Eq.  138;  March  v.  Berrier,  6  Ired.  Eq.  524;  Shumway  v.  Cooper, 
16  Barb.  556. 

8  Snowhill  v.  Snowhill,  2  Green's  Ch.  20. 
*  Hovey  v.  Dary,  154  Mass.  7. 
6  Hassard  v.  Rowe,  1 1  Barb.  22. 

6  Billington's  Appeal,  3  Rawle,  48,  55.    Perry,  §  458,  says  it  is  not 
a  conversion.     Oeslager  v.  Fisher,  2  Pa.  St.  467. 

7  Brightly's  Dig.  (1894),  p.  2034,  §  49  ;  Boon  B.  Hall,  76  App.  Div. 
(N.  Y.)  520. 

8  Anderson  v.  Mather,  44  N.  Y.  249 ;  Ex  parte  Jewett,  16  Ala.  409. 


CONVERSION  OF  REAL  INTO  PERSONAL  PROPERTY      109 

estate.1  But  the  court  will  not  order  a  conversion  where 
it  is  contrary  to  the  wishes  of  the  testator ; 2  nor  will  it 
ratify  an  unauthorized  one. 

Where,  however,  it  has  become  impossible  to  carry  out 
the  testator's  wishes,  the  court  will  authorize  a  conversion 
on  the  cy  pres  doctrine,  which  amounts  to  decreeing 
that  the  wishes  of  the  testator  shall  be  carried  out  in  the 
nearest  possible  way,  and  seems  to  rest  on  his  implied 
authority.8 

Where,  however,  the  trust  is  for  an  infant,  the  court 
will  not  usually  authorize  a  conversion,  and  it  has  been 
denied  that  the  court  has  the  power  to  do  so  in  the  ab- 
sence of  statute,  but  such  statutes  exist  in  nearly  all 
jurisdictions.4  If  an  unauthorized  conversion  be  made, 
the  infant  may  elect  to  take  the  property  or  the  proceeds 
at  his  majority.6 

Where  a  trustee  is  given  the  power  to  invest  and  rein- 
vest, or  to  sell  and  manage  the  property,  a  power  to  con- 
vert will  be  implied,  and  under  the  general  language  used 
in  most  modern  settlements  the  power  is  generally  im- 
pliedly  given,  if  not  expressly  so. 

Investments.  —  It  is  the  trustee's  duty  to  keep  all  the 
trust  funds  at  all  times  fully  invested,  and  if  he  neglects 
doing  so  he  will  be  liable  for  interest  for  the  period  of  any 
unreasonable  delay.8  What  is  an  unreasonable  delay  is 
a  question  of  fact  depending  on  all  the  circumstances.7 

1  Snowhill  v.  Snowhill,  2  Greene's  Ch.  20. 

2  Rogeret;.  Dill,  6  Hill,  415  ;  Johns  v.  Johns,  172  HI.  472. 

8  Weeks  v.  Hobson,  150  Mass.  377 ;  Pennington  v.  Metropolitan 
Mnseum  of  Art,  65  N.  J.  Eq.  11.  See  p.  67,  supra. 

*  Rogers  v.  Dill,  6  Hill,  415 ;  Williamson  v.  Berry,  8  How.  495, 
531  ;  but  the  better  authority  seems  to  be  that  the  court  has  the 
power  to  order  a  sale.  Wood  v.  Mather,  38  Barb.  473 ;  8.  c.  44  N.  Y. 
249,  affirmed  on  appeal;  Ex  parte  Jewett,  16  Ala.  409. 

6  Robinson  v.  Robinson,  22  Iowa,  427  ;  Kaufman  v.  Crawford, 
9  Watts  &  Ser.  131. 

6  Robinson  v.  Robinson,  11  Beav.  371;  Cairn  v.  Cann,  33  Weekly 
Rep.  40. 

7  Perry,  §  462,  gives  numerous  examples. 


110  INVESTMENTS 

Simple  interest  will  be  ordinarily  computed,  but  in 
some  cases  the  trustee  will  be  chargeable  with  compound 
interest.1 

For  instance,  if  the  fund  is  for  accumulation  he  will  be 
charged  with  compound  interest,  since  it  was  his  duty  to 
have  invested  the  interest  as  it  accrued.  So,  too,  if  the 
property  was  invested  in  trade,  since  the  profits  will  be 
presumed  to  have  amounted  to  that; 2  but  in  this  case  the 
trustee  may  show  that  the  actual  profits  were  less,  since 
the  claim  of  the  beneficiary  is  for  actual  profits  or  simple 
interest.8 

In  some  jurisdictions  the  trustee  will  be  charged  com- 
pound interest  as  punishment  for  fraud,  misbehavior,  or 
for  disobeying  the  orders  of  court ; 4  but  this  doctrine  is 
not  general  or  commendable  on  principle,  or  universally 
followed.  The  true  principle  would  seem  to  be  "  that  the 
trustee  is  accountable  for  all  interest  and  profits  actually 
received  by  him  from  the  trust  fund,  and  for  all  which 
he  might  have  obtained  by  due  diligence  and  reasonable 
skill."  8 

If  he  was  directed  to  invest  in  a  particular  stock  or 
fund,  the  beneficiary  may  elect  to  take  simple  interest,  or 
the  number  of  shares  the  money  would  have  purchased 
with  the  dividends.6 

If  the  trustee  has  no  express  power  under  the  trust  in- 
strument to  change  investments,  the  court  can  authorize 
a  change,  and  will  do  so  for  good  reason ; 7  and  where 
an  emergency  exists  and  there  is  no  opportunity  to  get 
a  decree,  will  ratify  a  change  made  by  the  trustee  without 
authority. 

1  Infra,  p.  154.  2  Eliott  v.  Sparrell,  114  Mass.  404. 

8  Attorney  General  v.  Alford,  4  DeG.,  M.  &  G.  843,  p.  851 ;  Utica 
Ins.  Co.  v.  Lynch,  11  Paige,  520.  Infra,  p.  154. 

*  McKim  v.  Hibbard,  142  Mass.  422;  Jennison  v.  Hapgood,  10 
Pick.  77. 

6  Perry,  §  472,  end  ;  Cruce  v.  Cruce,  81  Mo.  676. 

6  Onseley  v.  Anstruther,  1 0  Beav.  453,  456. 

7  Murray  v.  Feinour,  2  Md.  Ch.  418. 


INVESTMENTS  111 

The  property  being  once  well  inve8ted,  the  investments 
should  not  be  changed  without  a  good  reason ; l  such  as, 
for  instance,  that  an  investment  has  become  insecure  and 
the  remainderman  is  likely  to  suffer  loss,  or  because  it 
has  become  unproductive  and  the  life  tenant  is  suffering 
loss. 

The  mere  fact  that  the  property  has  increased  in  value 
is  not  a  sufficient  reason  to  sell;  for  "the  doctrine  can 
readily  be  pressed  so  far  as  to  sanction  a  practice  of 
trading  and  trafficking  in  trust  securities,  which  would  be 
attended  with  dangerous  results  to  the  trust  fund ;  "  2  but 
if  it  has  acquired  a  speculative  value  much  above  its  value 
as  an  investment,  the  investment  should  be  changed  so 
that  the  life  tenant  may  receive  the  increase  of  income  he 
is  entitled  to. 

The  trustee's  duty  in  investing  the  funds  io  a  double 
one,  namely,  to  invest  them  securely,  so  that  they  shall  be 
preserved  intact  for  the  remainderman,  and  to  invest  them 
productively,  so  that  they  shall  yield  the  current  rate  of 
interest  to  the  life  tenant.  He  must  hold  the  scales 
evenly,  and  must  not  sacrifice  the  interest  of  either  bene- 
ficiary ;  and  the  popular  idea  that  security  is  the  only  con- 
sideration is  erroneous,  as  the  trustee  is  equally  bound  to 
get  the  customary  income  for  the  life  tenant,  and  cannot 
sacrifice  his  interests  to  those  of  the  remainderman.8 

The  trust  instrument  may,  and  ordinarily  does,  pre- 
scribe the  kind  or  class  of  property  in  which  the  trustee 
may  invest,  and  where  it  does  so  its  provisions  will  super- 
sede those  of  the  court  or  legislature  ; 4  but  being  special 
powers  they  must  be  complied  with  strictly. 

1  N.  Eng.  Tr.  Co.  v.  Eaton,  140  Mass.  532,  533  ;  Murray  v.  Feinour, 
2  Md.  Ch.  418 ;  Ward  v.  Kitchen,  30  N.  J.  Eq.  31. 

2  N.  Eng.  Tr.  Co.  v.  Eaton,  140  Mass.  532,  537. 
8  Kinmonth  v.  Brigham,  5  Allen,  270. 

*  Womack  v.  Austin,  1  S.  C.  421  ;  Arnould  v.  Grimstead,  21 
Weekly  Reporter,  155 ;  Denike  v.  Harris,  84  N.  Y.  89 ;  Ovey  v.  Ovey, 
(1900),  2  Ch.  524;  In  re  Wedderburn,  9  Ch.  D.  112,  was  not  followed. 


112  INVESTMENTS 

A  general  authority  to  the  trustee  to  invest  ' '  at  discre- 
tion" does  not  specify  any  kind  of  property,1  and  does 
not  enlarge  his  powers;  but  authority  to  invest  "  in  such 
securities  as  to  him  seems  best,"  or  "  to  exercise  the  same 
control  I  now  have,"  with  other  marks  of  confidence, 
gives  authority  to  choose  illegal  investments  in  those  juris- 
dictions where  the  class  of  investments  is  limited  ; 2  but 
the  trustee  is  still  required  to  exercise  a  sound  discretion 
only.  He  is  given  the  latitude  allowed  by  the  Massachu- 
setts rule,  and  nothing  more,  even  in  Massachusetts.8 

If  the  trustee  is  authorized  to  invest  in  real  securities 
or  mortgages,  the  class  will  not  be  held  to  cover  a  bond 
secured  by  a  mortgage  of  a  railroad ; 4  but  a  house  for  the 
occupation  of  the  beneficiary  has  been  held  to  be  an 
investment  in  productive  real  estate,5  and  a  judicious 
provision  of  one  of  the  chief  requisites  of  life.6 

Where  a  testator  provides  that  his  trustees  shall  con- 
tinue his  business,  it  is  their  duty  to  do  so;  but  if  the 
matter  is  permissive,  they  should  not  continue  it  against 
their  judgment.  A  partnership  cannot  be  continued  after 
there  is  a  change  in  the  firm,7  nor  should  the  amount 
invested  in  it  be  increased.8  Where  it  is  impossible  to 
comply  with  the  investments  required  by  the  trust  instru- 
ment, recourse  must  be  had  to  the  court  for  directions.9 

What  classes  or  kinds  of  investments  are  trust  invest- 
ments vary  in  different  jurisdictions,  and  are  determined 
in  some  by  statute  and  in  others  by  rule  of  court.  Stat- 
utes in  some  jurisdictions  are  construed  to  be  for  the  pro- 

1  King  v.  Talbot,  40  N.  Y.  76. 

2  Lawton  v.  Lawton,  35  App.  Div.  (N.  Y.)  390. 

8  In  re  Hall,  164  N.  Y.  196  ;  Davis  Appellant,  183  Mass.  499. 
4  Kobinson  v.  Robinson,  1 1   Bear.  37 1  ;  King  v.  Talbot,  50  Barb. 
453  ;  but  see  Knight  v.  Boston,  159  Mass.  551,  and  dissenting  opinion. 
6  Schaffer  v.  Wads  worth,  106  Mass.  19  ;  Stone  v.  Clay,  103  Ky.  314. 
6  Mulford  v.  Mulford,  53  Atl.  Rep.  79,  83  (N.  J.  Ch.  1902). 
'  Cummins  v.  Cummins,  3  Jo.  &  Lat.  64. 

8  McNeillie  v.  Acton,  4  DeG  ,  M.  &  G.  744. 

9  Mclntire's  Adm'rs  v.  Zanesville,  17  Ohio  St.  352. 


INVESTMENTS  113 

tection  of  the  trustee  merely,  and  not  as  forbidding  other 
investments  than  those  specified  by  law ; 1  yet  where  such 
a  statute  exists,  a  trustee  would  be  imprudent  if  he  in- 
vested in  other  than  the  specified  securities,2  although  he 
might  be  justified  in  not  converting  unspecified  securities, 
if  he  took  them  from  the  testator.8 

Where  there  is  no  statute  or  decision  of  the  highest 
court  fixing  the  class  of  securities  in  which  a  trustee  may 
invest,  he  can  safely  follow  the  rule  prescribed  for  the 
investment  of  the  funds  of  savings  banks. 

In  England  the  only  kind  of  investments  formerly  al- 
lowed were  in  the  government  funds ; 4  but  in  America 
the  total  absence  of  such  securities  in  early  times,  and 
their  relative  scarcity  in  later  times,  gave  rise  of  necessity 
to  a  different  rule,  called  the  American  rule,  which  is  in 
general  terms  that  "  a  trustee  must  observe  how  men  of 
prudence,  discretion,  and  intelligence  manage  their  own 
affairs,  not  in  regard  to  speculation,  but  in  regard  to  the 
permanent  disposition  of  their  funds,  considering  the 
probable  income,  as  well  as  the  probable  safety  of 
the  capital  to  be  invested."  8 

The  courts  and  legislatures  in  various  jurisdictions 
have,  from  this  rule,  evolved  very  different  results,  the 
court  deciding  in  New  York  that  a  prudent  man  would 
not  invest  in  the  stocks  of  railroads,  banks,  manufactur- 
ing or  insurance  companies  ; 6  saying  that  "  The  moment 
a  fund  is  invested  in  a  bank,  or  insurance,  or  railroad 
stock,  it  has  left  the  control  of  the  trustees ;  its  safety,  and 
the  hazard  or  risk  of  loss  is  no  longer  dependent  upon 
their  skill,  care,  or  discretion  in  its  custody  or  manage- 

1  Clark  v.  Beers,  61  Conn.  87. 
a  Worrell's  Appeal,  23  Pa.  St.  44. 
8  Supra,  p.  106. 

4  Now  under  the  Trustees  Relief  Acts  a  large  field  is  opened. 
Lewin,  ch.  xiv,  §  4. 

5  Putnam,  J.,  Harvard  College  v.  Amory,  9  Pick.  446.  461  ;  Mat 
tocks  v.  Moulton,  84  Me.  545  ;  King  v.  Talbot,  40  N.  Y.  76. 

«  King  v.  Talbot,  40  N.  Y.  76. 

8 


114  INVESTMENTS 

ment,  and  the  terms  of  the  investment  do  not  contem- 
plate that  it  ever  will  be  returned  to  the  trustees ;  " l  but 
that  the  ideal  man  would  invest  in  real  estate,  bonds  of 
individuals  secured  by  first  mortgages  of  real  estate,  first 
mortgage  bonds  of  corporations,  and  municipal  securities. 

On  the  other  hand,  the  courts  of  Massachusetts  hold 
that  a  prudent  man  may  invest,  in  addition  to  the  class  of 
securities  allowed  in  New  York,  in  the  stocks  of  good 
business  corporations,  such  as  banks,  railroads,  manu- 
facturing and  insurance  companies,2  and  in  notes  of  indi- 
viduals secured  by  the  stock  of  such  companies,  and 
certificates  of  deposit  of  good  banks.8 

Chief  Justice  Field,  in  Dickinson's  Appeal,  152  Mass. 
184,  at  p.  187,  lays  down  and  explains  the  Massachusetts 
rule  in  part  as  follows  :  — 

"  A  trustee  in  this  Commonwealth  undoubtedly  finds  it 
difficult  to  make  satisfactory  investments  of  trust  prop- 
erty. The  amount  of  funds  seeking  investment  is  very 
large ;  the  demand  for  securities  which  are  as  safe  as  is 
possible  in  the  affairs  of  this  world  is  great;  and  the 
amount  of  such  securities  is  small,  when  compared  with 
the  amount  of  money  to  be  invested.  ...  A  trustee,  whose 
duty  is  to  keep  the  trust  fund  safely  invested  in  pro- 
ductive property,  ought  not  to  hazard  the  safety  of 
the  fund  under  any  temptation  to  make  extraordinary 
profits.  .  .  . 

,  *'  Our  cases,  however,  show  that  trustees  in  this  Com- 
monwealth are  permitted  to  invest  portions  of  trust  funds 
in  dividend-paying  stocks  and  interest-bearing  bonds  of 
private  business  corporations,  when  the  corporations  have 
acquired,  by  reason  of  the  amount  of  their  property  and 
the  prudent  management  of  their  affairs,  such  a  reputa- 
tion that  cautious  and  intelligent  persons  commonly  invest 
their  own  money  in  such  stocks  and  bonds  as  permanent 
investments." 

1  Woodruff,  J.,  in  King  v.  Talbot,  ubi  supra. 

2  Harvard  College  v.  Amory,  9  Pick.  446. 
»  Hunt,  Appellant,  141  Mass.  515. 


INVESTMENTS  115 

In  the  hands  of  a  good  trustee  the  Massachusetts  rule 
is  undoubtedly  superior,  since  it  gives  him  a  larger  op- 
portunity to  use  his  skill  and  ability  as  a  financier  for 
the  advantage  of  his  beneficiaries ;  but  undoubtedly  the 
English  rule,  or  the  New  York  rule,  is  better  adapted  to 
inexperienced  or  ignorant  trustees,  as  much  less  is  left 
to  their  discretion,  and  unfortunately  trustees  are  too 
often  appointed  from  considerations  of  friendship,  and 
not  from  consideration  of  their  discretion  or  business 
ability. 

The  laws  of  the  various  States  give  a  preponderance  in 
favor  of  the  Massachusetts  rule,  and  a  large  majority  of 
carefully  drawn  trust  instruments  give  the  trustees  the 
larger  discretion.1 

The  rule  prevailing  in  each  of  various  States  is  briefly 
stated  at  the  end  of  this  chapter. 

The  following  kinds  of  investments  are  everywhere 
disapproved,  viz.:  loans  on  personal  security  merely;3 
investment  in  unincorporated  business  ventures,  partner- 
ship, and  patent  rights ; 8  second  mortgages 4  and  mort- 
gages on  leasehold  security,6  however  large  the  margin, 
since  the  first  mortgage  may  be  foreclosed ;  unproductive 
real  estate,  and  all  investments  of  an  untried  6  or  specula- 
tive nature.  Investments  without  the  jurisdiction  of  the 
court,  being  under  dissimilar  laws  and  beyond  the  court's 
control,  are  not  usually  approved ;  but,  if  they  are  in  con- 
formity with  the  purposes  of  the  trust,  will  be  sanctioned.7 

1  Perry,  §  456,  opines  to  the  contrary.     See  note  to  Nyce's  Estate, 
40  Amer.  Dec.  498. 

2  Holmes  v.  Dring,  2  Cox  Eq.  c.  1  ;  Hunt  v.  Gontrum,  80  Md.  64. 
8  Trull  v.  Trull,  13  Allen,  407  ;  Ames,  471,  n. 

*  Gen.  Stat.  Conn.  (1902),  §  254 ;  Mattocks  v.  Moulton,  84  Me.  545; 
Porter,  v.  Woodruff,  36  N.  J.  Eq.  174;  Ames,  485,  n.  As  vendor,  a 
trustee  might  be  justified  in  taking  a  second  mortgage  in  part  pay- 
ment. Taft  v.  Smith,  186  Mass.  31. 

6  Slauter  v.  Favorite,  107  Ind.  292,  296. 

6  Kimball  v.  Reding,  31  N.  H.  352. 

7  Ames,  486.  n. ;  Amory  i>.  Green,  13  Allen,  414 ;  Ormiston  ». 
84  N.  Y.  339 ;  Thayer  v.  Dewey,  185  Mass.  68.    Infra,  p.  19S 


116  INVESTMENTS 

Having  ascertained  the  kind  of  investments  he  may 
make,  the  trustee  must  exercise  a  sound  discretion  in 
selecting  investments  within  the  authorized  class.1  That 
is  to  say,  he  must  exercise  the  same  degree  of  intelligence 
and  diligence  that  a  man  of  average  ability  would  exercise 
in  making  his  own  investments ; 2  and  a  provision  of  the 
settlement  giving  him  unlimited  discretion  does  not  alter 
his  duty  to  use  care,  although  it  may,  but  will  not  neces- 
sarily, extend  the  class  of  investments  in  which  he  may 
invest.8 

The  question  of  whether  there  was  a  sound  exercise 
of  discretion  4  will  be  determined  according  to  the  state  of 
facts  as  they  existed  when  the  investment  was  made,  and 
not  in  the  light  of  later  developments ;  but  as  these  are 
sometimes  difficult  to  reproduce,  or  may  be  forgotten,  any 
memorandum  of  the  inducements  made  at  the  time  may 
be  of  service  in  refreshing  the  recollection.6 

Where  the  class  of  investments  allowed  is  large,  it  has 
been  held  imprudent  to  invest  more  than  a  fifth  part  of 
the  estate  in  one  investment.6 

The  margin  of  security  required  on  a  mortgage  loan  is 
generally  fixed  either  by  decision 7  or  by  statute  at  one 
half,  but  the  amount  of  margin  required  also  depends 
on  the  nature  of  the  estate,  a  less  margin,  say  one  third, 
being  required  where  the  values  are  more  stable.  In 
England  farming  lands  were  considered  the  most  stable, 
but  in  America  business  property  in  a  city  would  probably 
be  so  considered. 


1  Womack  v.  Austin,  1  S.  C.  421 ;  Re  WLiteley,  33  Ch.  Div.  347, 
350 ;  Ormiston  v.  Olcott,  84  N.  Y.  339. 

2  In  re  Salmon,  42  Ch.  Div.  351 ;   Harvard  College  v.  Amory, 
9  Pick.  446. 

8  Tuttle  v.  Gilmore,  36  N.  J.  Eq.  617  ;  lung  v.  Talbot,  40  N.  Y.  76. 
*  Brown  v.  French,  125  Mass.  410. 

6  Green  v.  Crapo,  181  Mass.  55;  Parker  v.  Boston  Safe  Dep.  & 
Trust  Co.,  186  Mass.  393;  Davis,  Appellant,  183  Mass.  499. 
6  Dickinson's  Appeal,  152  Mass.  184. 
'  In  re  Salmon,  42  Ch.  Div.  351. 


INVESTMENTS  117 

Where,  however,  the  settlement  provided  that  the  trus- 
tee should  not  be  liable  for  loss  on  account  of  taking 
insufficient  security,  he  was  not  excused  for  making  an 
unauthorized  loan  to  a  person  unsecured,1  since  the  loss 
was  on  account  of  going  outside  of  the  class  and  not 
because  the  investment  was  poor  of  its  kind. 

Investments  allowed  in  Various  States.  — Alabama. — 
By  statute  may  invest  in  securities  of  State  or  United 
States.  Code  (1896),  §  4174.  Constitution  forbids  any 
law  authorizing  trustees  to  invest  in  bonds  or  stocks  of 
private  corporation.  See  Randolph  v.  E.  Birmingham 
Land  Co.,  104  Ala.  355.  English  rule  laid  down,  but 
statute  not  alluded  to. 

Alaska.  —  No  authorities. 

Arizona.  —  No  authorities. 

Arkansas.  —  No  authorities. 

California.  —  American  rule.  Civil  Code  (1903),  §  2261; 
In  re  Cousins's  Estate,  111  Cal.  441. 

Colorado.  —  English  rule.  Laws  of  1903,  ch.  181, 
§  71.  Executors,  administrators,  guardians,  and  con- 
servators, in  bonds  of  the  United  States  or  Colorado, 
or  mortgages  approved  by  the  court.  No  express  pro- 
vision concerning  investments  by  trustees.  Investments 
in  stock  or  bonds  of  private  corporations  forbidden.  Con- 
stitution, §  359.  See  Alabama. 

Connecticut.  —  Rev.  Stat  (1902),  §§254,  255.  First 
mortgages  to  fifty  per  cent  of  value;  United  States,  State, 
town,  or  city  bonds,  and  savings  bank  securities.  Statute 
not  mandatory,  but  there  is  a  rigid  responsibility  for  other 
investments.  Clark  v.  Beers,  61  Conn.  87. 

Delaware.  —  Massachusetts  rule.  Massey  v.  Stout, 
4  Del.  Ch.  274,  288. 

Florida.  —  Gen.  Stat.  (1906),  §  2717.  Bank  stocks. 
Gen.  Stat  (1906),  §§  2433  and  2612.  Mortgages  and 
United  States  or  State  securities,  which  are  free  of  taxa- 

1  Ryder  v.  Bickerton,  3  Swanst.  80,  n. 


118      INVESTMENTS  ALLOWED   IN   VARIOUS  STATES 

tion,  or  others  ordered  by  court.  These  statutes  refer 
to  executors  and  guardians,  and  not  expressly  to  trustees, 
but  trustees  would  be  safe  in  following  the  same  rules. 

Georgia.  —  Code  (1895),  §  3180.  In  stocks,  bonds,  or 
other  securities  issued  by  State.  Any  other  investment 
must  be  made  under  order  of  court.  Brown  v.  Wright, 
99  Ga.  96 ;  Bull  v.  Walker,  71  Ga.  196 ;  Campbell  v. 
Miller,  38  Ga.  304. 

Hawaii.  —  No  authority. 

Idaho.  —  No  authority. 

Illinois.  —  Masachusetts  rule.  Sholty  v.  Sholty,  140  111. 
82;  Sherman  v.  White,  62  111.  App.  271. 

Indiana.  —  Mortgage  securities  allowed  on  sale. 
Burns's  Annot.  Stat  (1901),  §§  3415,  3416.  Massa- 
chusetts rule  approved  in  Slauter  v.  Favorite,  107  Ind. 
292,  296;  Shuey  v.  Latta,  90  Ind.  136;  but  in  Tucker 
v.  State,  73  Ind.  242,  New  York  rule  approved. 

Iowa.  —  Code  (1897),  §  364.  Stocks  and  bonds  of 
United  States  and  State,  and  mortgages  at  fifty  per 
cent  of  value. 

Kansas.  —  No  authorities. 

Kentucky.  —  Stat.  (1903),  §  4706.  Real  estate,  mort- 
gages, stocks  and  bonds,  or  loans  secured  by  same.  But 
not  in  railroads  unless  operated  ten  years  without  default- 
ing, or  municipal  securities  that  have  not  defaulted  within 
ten  years.  Aydelott  v.  Breeding,  111  Ky.  847.  Statute 
not  mandatory.  Substantially  Massachusetts  rule.  Fidel- 
ity Co.  v.  Glover,  90  Ky.  355. 

Louisiana.  —  No  authorities. 

Maine.  —  Massachusetts  rule.  Mattocks  v.  Moulton, 
84  Me.  545 ;  Emery  v.  Batchelder,  78  Me.  "233. 

Maryland.  —  Hunt  r.  Gontrum,  80  Md.  64  (semble). 
English  rule.  Trustee  appointed  by  court  should  get  its  di- 
rections. Lowe  v.  Convention  of  Prot.  Ep.  Ch.,  83  Md.409. 

Massachusetts.  —  Massachusetts  rule,  ubi  supra. 

Michigan.  —  Semble  Massachusetts  rule.  See  Caspari 
v.  Cutcheon,  110  Mich.  86. 


INVESTMENTS   ALLOWED   IN   VARIOUS  STATES      119 

Minnesota.  —  Under  direction  of  court.  Rev.  Laws 
(1905),  §  3249. 

Mississippi.  — Massachusetts  rule.  Smyth  v.  Burns, 
25  Miss.  422 ;  Coffin  v.  Bramlitt,  42  Miss.  194. 

Missouri.  —  Massachusetts  rule.  Gamble  v.  Gibson, 
59  Mo.  585 ;  Taylor  v.  Kite,  61  Mo.  142,  144 ;  Drake 
v.  Crane,  127  Mo.  85,  106;  Garesch^  v.  Priest,  9  Mo. 
App.  270. 

Montana.  —  Civil  Code  (1895),  §  3013.  Reasonable 
security  and  interest. 

Nebraska.  —  No  authority. 

Nevada.  —  No  authority. 

New  Hampshire. — Pub.  Stat  (1901),  ch.  198,  §11,. 
ch.  178,  §  9.  In  notes  secured  by  mortgage  of  real  estate 
worth  at  least  double,  in  savings  banks,  or  bonds  and 
loans  of  State,  city,  town,  or  county  of  New  Hampshire, 
or  of  the  United  States,  and  in  no  other  way.  Also  in 
stock  of  leased  steam  railroads  located  wholly  or  in  part 
in  New  England,  whose  rental  is  guaranteed  by  the  Boston 
&  Maine,  the  New  York,  New  Haven,  &  Hartford,  or  the 
New  York  Central  &  Hudson  River  Railroads.  Laws  of 
1901,  ch.  3. 

New  Jersey.  —  Laws  of  1899,  ch.  103.  In  bonds  of 
the  United  States,  New  Jersey,  and  of  certain  municipal- 
ities. Also  in  first  mortgages  on  real  estate  to  an  amount 
not  exceeding  fifty  per  cent  of  its  value,  and  bearing  in- 
terest at  not  less  than  three  nor  over  six  per  cent.  Laws 
of  1903,  ch.  146,  adds  loans  or  securities  in  which  savings 
banks  may  invest 

New  Mexico.  —  No  authority. 

New  York.  —  New  York  rule,  ubi  supra.  Laws  of 
1897,  ch.  417,  §  9,  amended  by  Laws  of  1902,  ch.  295. 
Same  as  savings  banks ;  also  in  first  mortgages  on  land 
worth  at  least  fifty  per  cent  more  than  the  amount  loaned 
thereon.  In  re  Avery,  45  Misc.  Rep.  529. 

North  Carolina.  —  Code  (1905),  §§  1792  and  5054. 
In  United  States  bonds  or  any  bonds  guaranteed  ty 


120       INVESTMENTS   ALLOWED   IN   VARIOUS   STATES 

United  States,  and  in  State  bonds.  Statute  not  man- 
datory. Massachusetts  rule  approved.  Moore  v.  Eure, 
101  N.  C.  11. 

North  Dakota.  — "Rev.  Code  N.  Dak.  (1895),  §  4286. 
Reasonable  security  and  interest.  American  rule.  No 
authorities. 

Ohio.  —  Bates's  Annot  Stat  (1906),  §  6413.  Certifi- 
cates of  indebtedness  of  State  or  United  States,  or  as 
approved  by  court. 

Oregon.  —  No  authorities. 

Pennsylvania.  —  Const.,  Art.  3,  §  69.  No  bonds  or 
stocks  of  business  corporation.  Stat.  Brightly's  Purdon's 
Dig.  (1894),  p.  594,  §§  121, 122. 123.  Court  may  authorize 
investments  in  debt  of  United  States,  State,  or  Philadelphia, 
and  real  securities  ;  bonds  or  certificates  of  debt  of  school 
districts,  municipal  corporations  of  State,  or  by  leave  of 
court  in  ground  rents  or  other  real  estate.  Statute  man- 
datory. Hemphill's  Appeal,  18  Pa.  St.  303 ;  Baer's  Appeal, 
127  Pa.  St.  (1889),  360.  Cf.  Law's  Estate,  144  Pa.  St. 
499,  507. 

Rhode  Island. —Gen.  Laws  (1896),  ch.  208,  §  12, 
gives  trustees  full  power  and  discretion.  Massachusetts 
rule  followed,  but  should  invest  under  order  of  court. 
Peckham  v.  Newton,  15  R.  I.  321 ;  Grinnell  v.  Baker, 
17  R.  I.  41. 

South  Carolina.  —  Semble,  Massachusetts  rule.  Should 
loan  on  mortgage,  if  possible;  if  not,  should  loan  on 
good  security.  Nance  v.  Nance,  1  S.  C.  209  ;  Single- 
ton v.  Lowndes,  9  S.  C.  465 ;  Nobles  v.  Hogg,  36  S.  C. 
322. 

South  Dakota.  —  Reasonable  security  and  interest. 
Civil  Code  (1904),  §  1639. 

Tennessee. —  Code  (1896),  §  5434.  In  public  stocks 
and  bonds  of  United  States,  and  report  to  county  court. 

Texas.  —  Massachusetts  rule.  Finlay  v.  Merriman, 
39  Tex.  56. 

Utah.  —  No  authority. 


INVESTMENTS   ALLOWED  IN   VARIOUS   STATES       121 

Vermont.  —  Revised  Laws  (1894),  §  2617.  In  real 
estate,  or  such  other  manner  as  court  directs.  Semble, 
Massachusetts  rule.  Barney  v.  Parsons,  54  Vt.  623 
(1882);  McCloskey  v.  Gleason,  56  Vt.  264. 

Virginia.  —  Semble^  Massachusetts  rule.  Davis  v. 
Harman,  21  Gratt.  194,  p.  201. 

Washington.  —  Massachusetts  rule  in  practice,  no 
authority. 

West  Virginia.  —  Semble,  English  rule.  Key  v.  Hughes, 
32  W.  Va.  184,  189. 

Wisconsin,  —  Governmental  and  real  estate  securities ; 
bonds  of  Wisconsin,  and  of  certain  other  States  and 
municipalities;  bonds  and  stock  of  steam  railroads 
owning  and  operating  not  less  than  five  hundred  miles 
of  track,  and  which  have  paid  dividends  on  their  entire 
capital  for  the  last  ten  years ;  also  notes  secured  by 
pledge  of  such  securities.  Wisconsin  Stat.,  Supplement 
of  1906,  §  2100  B.  Allis's  Estate,  123  Wis.  223. 

Wyoming.  —  No  authority. 

Principal  and  Income.  —  Receipts.  —  As  different  per- 
sons are  entitled  to  the  principal  and  income  of  the  trust 
fund,  the  determination  of  whether  a  receipt  or  charge 
shall  belong  to  principal  or  income  is  of  great  importance, 
and  the  erroneous  determination  of  the  question  may 
make  the  trustee  liable  for  a  large  amount;  as,  for  in- 
stance, where  he  has  paid  the  life  tenant  sums  of  money 
which  belonged  to  principal,  and  should  have  been  in- 
vested, and  these  he  has  no  right  to  recover  back  in  most 
cases,1  and  which  even  if  he  have  the  right  he  may  not 
be  able  to  recover  back  owing  to  the  beneficiary's  want  of 
financial  responsibility.  In  fact,  the  question  will  usually 
arise  after  the  death  of  the  life  tenant,  when  the  remain- 
derman comes  into  possession,  and  when  it  is  too  late  to 
recoup  from  the  income. 

1  Bate  v.  Hooper,  5  DeG.,  M.  &  G.  338 ;  Downes  v.  Bullock,  25 
Beav.  54, 59,  62.  See  L.  Langdale,  Fyler  v.  Fyler,  3  Beav.  550,  563, 
for  striking  example,  and  infra,  p.  184. 


122  PRINCIPAL   AND   INCOME 

In  general,  at  the  time  the  estate  comes  into  the  trus- 
tee's hands  it  is  all  principal,  in  whatever  condition  it  may 
happen  to  be,  and  all  yearly  increase  thereafter  is  income.1 
This  would  always  be  the  case  where  the  property  comes 
into  the  trustee's  hands  without  delay  and  invested  in 
proper  trust  securities  ;  but  if  there  is  a  deferred  receipt 
on  the  conversion  of  the  estate,  the  rule  is  different. 

Where  for  any  reason  property  does  not  come  into  the 
hands  of  the  trustee  for  some  time  after  the  beginning  of 
the  trust,  and  in  the  meanwhile  the  life  tenant  has  no 
benefit  from  it,  the  fund  when  realized  must  be  so  appor- 
tioned that  the  life  tenant  will  get  the  usual  rate  of  inter- 
est from  the  beginning  of  the  trust,  and  the  remainder 
will  be  the  principal  fund.2 

This  may  be  the  case  where  the  amount  of  a  legacy  or 
other  fund  is  not  immediately  received  or  not  received  in 
full,8  or  where  the  property  being  an  unsuitable  invest- 
ment is  sold  for  conversion  at  an  interval  after  the  trust 
went  into  effect.  It  is  immaterial  that  the  trustee  be 
given  discretion  as  to  the  time  when  he  shall  make  the 
conversion,  if  there  must  be  a  conversion  at  some  time ;  * 
but  if  the  trustee  has  a  discretion  to  hold  the  property  as 
a  permanent  investment,  no  apportionment  will  be  made  if 
he  converts  it.6 

The  rule  is  the  same  whether  the  property  be  converted 
because  it  is  unproductive,  as,  for  instance,  vacant  land,8 

1  Where  the  estate  was  stocks  pledged  as  collateral  the  creditors 
retained  the  dividends  on  account  of  the  notes,  and  it  was  held  that 
they  were  not  income.     They  never  came  as  such  into   executor's 
hands.     Skinner  v.  Taft,  140  Mich.  282. 

2  Kinmonth  v.  Brigham,  5  Allen,  270;  Hagan  v.  Platt,48  N.  J.  Eq. 
206 ;  Westcott  v.  Nickerson,  120  Mass.  410 ;  Edwards  v.  Edwards,  183 
Mass.  581. 

8  Cox  v.  Cox,  L.  R.  8  Eq.  343. 

*  Edwards  v.  Edwards,  183  Mass.  581  ;  Mndge  v.  Parker,  139  Mass. 
153.  It  was  decided  otherwise  in  Kite's  Devisees  v.  Rite's  Ex'rs,  93 
Ky.  257,  p.  264,  but  on  the  ground  of  testator's  intent. 

6  Hemenway  v.  Hemenway,  134  Mass.  446. 

6  In  re  Neel's  Estate,  207  Pa.  St.  446  ;  Billings  v.  Warren,  216  111.  281. 


PRINCIPAL   AND   INCOME  123 

a  bottomry  bond  or  similar  security  where  the  principal 
and  income  are  included  in  one  sum,  or  a  defaulted  note 
or  obligation  on  which  the  whole  amount  is  not  recovered, 
or  where  an  obligation  is  in  default  and  the  security  has 
been  realized  on ; l  or  whether  it  be  converted  because  the 
earnings  are  greatly  in  excess  of  interest,  as  in  the  case 
of  a  business  or  partnership,  or  on  a  wasting  investment 
such  as  a  land  stock  where  the  dividends  will  ultimately 
exhaust  the  security.  In  either  case  the  rule  is  the  same, 
namely,  that  sum  is  to  be  found  which  at  the  current 
rate  of  interest  for  the  period  from  the  beginning  of  the 
trust  to  the  time  of  conversion  will  yield  the  amount  real- 
ized. The  sum  so  ascertained  is  the  principal,  and  the  in- 
terest is  the  income  payable  to  the  immediate  beneficiary. 

For  instance,  in  a  case  where  a  trustee  who  had  wasted 
the  estate  was  removed  and  only  part  of  the  estate  was 
recovered  by  his  successor,  the  amount  of  the  original  es- 
tate was  $30,000,  and  the  whole  amount  recovered  after 
one  year  and  two  months  was  $26,000.  The  tenant  for 
life  got  $1,742.50,  which  is  the  interest  at  six  per  cent  on 
$24,257.50,  the  new  capital  for  one  year  and  two  months; 2 
but  where  the  return  is  excessive,  if  a  definite  intention 
on  the  part  of  the  maker  of  the  trust  can  be  shown  that 
the  life  beneficiary  shall  have  all  the  proceeds,  i.  e. 
shall  enjoy  the  income  in  specie,  his  intention  will  pre- 
vail, and  the  whole  profits  will  be  paid  to  the  life  tenant 
as  income.8 

The  amount  recovered  as  damages  for  an  injury  or  a 
taking  *  need  not  be  apportioned,  as  the  fund  invested  will 

1  In  re  Alston  (1901),  2  Ch.  584  ;  Trenton  Trust  Co.  v.  Donnelly,  65 
N.  J.  Eq.  119. 

2  Parsons  v.  Winslow,  16  Mass.  361  ;  Maclaren  v.  Stainton,  L.  R. 
11  Eq.  382;  Meldon  v.  Devlin,  31  App.  Div.  N.  Y.    146;  Greene  v. 
Greene,  19  R.  I.  619. 

8  Howe  v.  Lord  Dartmouth,  2  White  &  Tudor,  L.  C.  Eq.,  6th  Am. 
ed.t  296;  Corle  v.  Monkhouse,  47  N.  J.  Eq.  73 ;  Westcott  v.  Nickerson, 
120  Mass.  410. 

*  Heard  v.  Eldredge,  109  Mass.  258. 


124       PRINCIPAL   AND   INCOME  —  GAIN   AND   LOSS 

yield  an  income,1  and  the  amount  recovered  will  bear  in- 
terest from  the  time  of  the  taking. 

The  converse  proposition,  i.  e.  the  payment  of  a  better- 
ment or  removal  of  an  involuntary  incumbrance,  falls 
under  the  same  rule. 

Gain  and  Loss.  —  The  general  rule  is  that  any  gain 
other  than  the  usual  yearly  income,  and  any  loss  other 
than  the  usual  yearly  charges,  fall  to  the  principal  of  the 
fund. 

Thus  real  estate 2  or  securities  may  advance  largely  in 
value  without  any  corresponding  increase  in  income,  and 
the  whole  gain  will  belong  to  the  principal  of  the  fund,8 
and  the  life  tenant  will  get  no  benefit  from  the  increase, 
unless  he  be  in  a  position  to  insist  on  a  sale  and  reinvest- 
ment of  the  property,  so  as  to  yield  an  adequate  return.4 

Gain  or  loss  in  continuing  a  business  temporarily  until 
it  is  converted  is  to  be  apportioned,5  but  where  the  busi- 
ness is  conducted  under  direction  of  the  trust  instrument, 
ordinarily  all  the  income  will  go  to  the  life  beneficiary,6 
and  the  loss  of  one  year  will  be  made  up  out  of  the  profit 
of  the  next ;  but  it  is  wholly  a  question  of  intention  to  be 
determined  by  the  construction  of  the  trust  instrument. 
If  the  gain  results  not  from  yearly  profits  of  the  business, 

1  Van  Vronker  v.  Eastman,  7  Met.  1 57. 

2  The  rule  as  to  vacant  land  is  stated  on  pp.  122-123. 

8  N.  Eng.  Trust  Co.  v.  Eaton,  140  Mass.  532 ;  In  re  Gerry,  103  N.  Y. 
445,  450  ;  In  re  Stevens,  46  Misc.  Rep.  (N.  Y.)  623,  aff'd  111  App.  Div. 
(N.  Y.)  773.  Gain  on  foreclosure  :  Parker  v.  Johnson,  37  N.  J.  Eq.  366 ; 
Graham's  Estate,  198  Pa.  St.  216. 

4  The  learned  editor  of  the  fourth  edition  of  Pern-  on  Trusts,  §  545, 
n.  1,  suggested  that  some  doubt  had  been  thrown  on  this  question  by 
the  reasoning  in  decisions  on  collateral  points  in  some  jurisdictions. 
See  Wiltbank's  Appeal,  64  Pa.  St.  256  ;  Earp's  Appeal,  28  Pa.  St.  368; 
Van  Doren  v.  Olden,  19  N.  J.  Eq.  176.  But  the  matter  seems  to  be 
now  settled  in  these  States  in  conformity  with  the  law  elsewhere. 
Graham's  Estate,  198  Pa.  St.  216;  In  re  Neel's  Estate,  207  Pa.  St.  446. 

6  Underbill,  250.     Supra,  p.  123. 

«  Heighe  v.  Littig,  63  Md.  301. 


GAIN   AND   LOSS  125 

but  from  increase  of  value  of  the  plant  or  property,  the 
gain  will  belong  to  principal.1 

If  the  trust  estate  consists  of  country  real  estate,  tim- 
ber cut  for  thinning  will  be  income,  other  timber  princi- 
pal, and  it  has  been  held  that  gravel  sold  will  be  income, 
but  probably  not  to  such  an  extent  as  to  be  waste.2 

If  the  trust  property  consists  in  part  of  chattels,  which 
are  intended  to  be  used  and  not  converted  into  cash  and 
invested,  the  life  tenant  may  wear  them  out  in  ordinary 
use,  and  need  not  replace  them.8 

If  the  property  consists  of  farming  stock  it  should  be 
converted,4  unless  intended  to  be  used  in  specie. 

The  life  tenant  cannot  sell  it,  even  though  it  be  replaced 
by  other  kind  of  stock;  as,  for  instance,5  where  cows  are 
unprofitable,  they  cannot  be  replaced  by  horses,  but  the 
beneficiary  for  life  may  use  them  up,  and  need  not  re- 
place them  when  they  die  ;6  and  the  natural  increase  will 
belong  to  him.7  Where,  however,  the  stock  is  left  with  a 
farm,  and  there  is  an  intention  expressed  or  implied  that 
the  farm  shall  be  kept  up,  so  much  of  the  increase  as  is 
necessary  to  keep  up  the  herd  will  belong  to  principal, 
and  only  the  excess  to  income.8 

Implements,  furniture,  and  cattle,  in  fact  all  property 

1  First  Natl.  Bank  of  Carlisle  v.  Lee,  66  S.  W.  Rep.  413  (Ky.  1902) ; 
In   re   Stevens,   111   App.  Div.    (N.  Y.)  773;   Smith  v.   Hooper,  95 
Md.  16. 

2  Earl  Cowley  v.  Wellesley,  L.  R.  1  Eq.  657. 

8  Wootten  v.  Burch,  2  Md.  Ch.   190.     See  infra,  p.   147;  supra, 
p.  107  ;  Woods  v.  Sullivan,  1  Swan  (Tenn.),  507. 
*  Burnett  v.  Lester,  53  111.  325. 
6  Leonard  v.  Owen,  93  Ga.  678. 

6  Poindexter  o.  Blackburn,  1  Ired.  Eq.  286  ;  Braswell  v,  Morehead, 
57  Am.  Dec.  586,  n.  ;  Saunders  v.  Haughton,  57  Am.  Dec.  581. 

7  Saunders  v.  Haughton,  8  Ired.  Eq.  217;  Lewis  v.  Davis,  3  Mo. 
133;  Major  v.  Herndon,  78  Ky.   124;  Hunt  v.  Watkius,  1  Humph. 
(Tenn.)  498. 

8  Calhoun  v.  Furgeson,  3  Rich.  Eq.  160;    Robertson  v.  Collier, 
1  Hill  Eq.  370  (S.  C.).    But  see  Flowers  v.  Franklin,  5  Watts  (Pa.), 
265 ;  life  tenant  was  to  keep  up  farm ;  increase  held  to  go  to  remain- 
derman. 


126  GAIN   AND   LOS8  —  DIVIDENDS 

that  will  wear  out  in  use,  must  be  bought  out  of  income. 
And  where  it  is  necessary  to  replace  chattels  which  are 
wearing  out  in  use,  the  trustee  may  withhold  some  of  the 
yearly  income  to  make  a  sinking  fund  for  that  purpose.1 

Any  income  which  is  rightfully  accumulated  and  added 
to  the  principal,  will  lose  its  character  as  income  and  be- 
come a  gain  to  principal ;  2  but  if  the  income  be  kept  in  a 
separate  fund,  even  though  invested,  it  retains  its  char- 
acter as  income,  and  may  be  used  as  such  during  the 
duration  of  the  trust.  If  not  so  used  it  will  become 
principal.8 

Dividends.  —  The  current  dividends  on  stocks  belong 
wholly  to  income,  even  when  the  stock  has  been  bought  at 
a  premium,  since  the  premium  is  only  a  part  of  the  price 
paid  for  an  investment,  or  a  definite  share  in  a  property 
or  business,  which  is  presumably  worth  the  price  paid, 
and  any  gain  or  loss  in  price  is  the  gain  or  loss  of  the 
principal.4 

If,  however,  the  investment  is  a  wasting  one,  such  as 
a  mining  or  land  stock,  unless  the  tenant  for  life  is 
expressly  given  the  full  dividend  by  the  settlement,  in 
which  case  he  will  of  course  take  it,5  he  will  be  entitled 
to  receive  only  the  current  rate  of  interest  on  the  inven- 
tory or  cost  value  of  the  investment,  and  the  balance  will 
be  applied  to  reduce  the  valuation,  and  the  amount  which 
he  is  entitled  to  receive  will  be  calculated  each  year  on 
the  new  principal  made  by  the  credits  of  the  preceding 
dividends.6 

1  Be  Housman,  4  Dem.  Sur.  404. 

2  Minot  v.  Tappan,  127  Mass.  333 ;  Blythe  v.  Green,  38  Atl.  743 
(N.  J.  Ch.). 

8  Robinson  v.  Bonaparte,  102  Md.  63. 

*  N.  Eng.  Trust  Co.  v.  Eaton,  140  Mass.  532.    See  note,  p.  124. 

6  Eeed  v.  Head,  6  Allen,  174;  Balch  v.  Hallett,  10  Gray,  402 ;  Rob- 
ertson v.  De  Brulatour,  111  App.  Div.  (N.  Y.)  882  ;  Lowry  v.  Farmers' 
Loan  &  Trnst  Co.,  172  N.  Y.  137. 

6  Paris  v.  Paris,  10  Ves.  185;  Mills  v.  Mills,  7  Sim.  909;  Brander 
v.  Brander,  4  Ves.  800.  Such  investments  should  ordinarily  be  con- 
verted. Supra,  p.  106. 


DIVIDENDS  —  EXTRA    DIVIDENDS  127 

When  the  excess  of  the  dividends  has  thus  entirely 
wiped  out  the  cost  of  the  investment,  all  the  dividends 
will  go  to  principal,  and  the  life  tenant,  though  an  ap- 
parent loser,  is  not,  because  he  will  receive  the  dividends 
on  the  new  investments  to  the  same  amount  which  was 
originally  invested,  which  is  all  he  is  entitled  to. 

The  rule  has  already  been  explained  as  to  the  receipts 
from  an  investment,  which  is  not  a  proper  trust  invest- 
ment, and  therefore  to  be  converted.1 

Extra  Dividends.  The  successful  corporation  of  mod- 
ern times  earns  much  more  than  it  distributes  in  regular 
yearly  dividends  to  its  stockholders.  To  insure  continued 
success  the  company  must  continually  put  more  money  into 
its  plant  and  business.  This  money  is  drawn  from  either 
or  both  of  two  sources,  viz. :  first,  the  accumulation  of 
surplus  profits,  that  is,  the  profits  which  are  left  after 
paying  the  usual  annual  dividends ;  and  secondly,  by  sub- 
scriptions of  new  capital,  which  subscription  is  usually 
for  a  less  sum  than  the  market  value  of  the  stock  given 
for  it  Hence  the  right  to  subscribe  is  a  valuable  right, 
either  to  use  or  to  sell. 

Besides  the  accumulations  necessary  to  renew  and 
extend  the  plant,  and  make  the  necessary  additions  to 
working  capital  to  keep  up  or  enlarge  the  business,  well 
managed  corporations  usually  set  aside  additional  earnings 
in  prosperous  times,  as  reserves  to  meet  future  exigencies. 
From  time  to  time,  as  these  accumulations  become  con- 
siderable, the  company  distributes  stock  to  represent  the 
capital  added  to  its  business ;  and  when  it  finds  that  it  has 
more  funds  than  are  required  as  reserves,  it  pays  them 
out  as  extra  cash  dividends. 

The  settlement  of  the  respective  rights  of  the  life  bene- 
ficiary and  remainderman  to  receive  the  benefits  of  these 
distributions  of  stock,  cash,  or  valuable  rights  to  subscribe 
to  stock  is  perplexing,  and  has  given  rise  to  much  litigation 
and  conflicting  decisions. 

i  /Supra,  p.  123. 


128  EXTRA   DIVIDENDS 

A  corporation  is  an  artificial  person,  which  owns  its 
property  in  the  same  way  that  a  natural  person  owns 
his.  The  stockholders  as  a  whole  are  the  corporation, 
but  separately  and  individually  own  none  of  its  property, 
and  are  not  entitled  to  any  share  of  it  until  it  has  been 
severed  from  the  general  fund  and  has  been  made  payable 
to  the  individual  stockholder  as  a  dividend.  As  between 
the  stockholder  and  the  corporation,  the  decision  of  the 
directors  is  absolute.1  They  can  make  dividends  or  not 
as  they  see  fit,  and  may  turn  earnings  into  permanent 
capital  or  distribute  accumulations  held  in  capital  as 
profits.2  It  is  when  the  dividend  has  come  into  the  hands 
of  the  stockholder  who  is  a  trustee  that  the  difficulty  arises 
in  determining  who  is  entitled  to  enjoy  it.  An  arbitrary 
rule  has  been  adopted  in  the  Supreme  Court  of  the  United 
States,  and  in  the  States  of  Massachusetts,  Illinois,  Maine, 
Georgia,  and  Connecticut,8  and  lately »  it  would  seem,  in 
England.4 

This  rule  is  concisely  and  clearly  stated  by  Chief  Justice 
Knowlton  as  follows  : 6  "In  Minot  v.  Paine,  99  Mass.  101, 
p.  108,  it  is  said  that  in  such  cases  '  a  simple  rule  is  to  re- 
gard cash  dividends  however  large  as  income,  and  stock 
dividends  however  made  as  capital.'  This  general  rule 

1  Hite's  Devisees  v.  Hite's  Ex'ors,  93  Ky.  257,  p.  265  ;  Pritchett  v. 
Nashville  Trust  Co.,  96  Tenn.  472. 

2  Sugden  v.  Ashley,  45  Ch.  D.  237 ;  Minot  v.  Paine,  99  Mass.  101  ; 
Hernenway  v.  Hemenway,  181  Mass.  406;  Smith  v.  Dana,  77  Conn. 
543,  p.  554.     It  is  probable  that  the  unsatisfactory  condition  of  the  law 
under  the  early  English  cases  referred  to  in  Minot  v.  Paine  resulted  in 
some  degree  from  the  fact  that  the  questions  arose  in  respect  to  joint 
stock  companies,  which  are  not  corporations,  but  partnerships ;  and 
ordinary  partners  are  entitled  to  the  profits  as  such. 

8  Gibbons  v.  Mahon,  136  U.  S.  549;  Minot  v.  Paine,  99  Mass.  101  ; 
De  Koven  ».  Alsop,  205  HI.  309;  Millen  v.  Guerrard,  67  Ga.  284; 
Ga.  Code,  §  2256 ;  Gilkey  v.  Paine,  80  Me.  319  ;  Richardson  v.  Richard- 
son, 75  Me.  570;  Smith  v.  Dana,  77  Conn.  543;  Mills  v.  Britton,  64 
Conn.  4 ;  Brinley  v.  Grou,  50  Conn.  66. 

4  Bouch  v.  Sproule,  12  App.  Cas.  385 ;  Sproule  v.  Bouch,  29  Ch.  D. 
635  ;  Sugden  v.  Ashley,  45  Ch.  D.  237. 

6  Lyman  v.  Pratt,  183  Mass.  58,  p.  60. 


EXTRA    DIVIDENDS  129 

has  been  followed  by  this  court  ever  since."  (Cases 
cited.)  "  In  determining  what  is  a  cash  dividend  and 
what  is  a  stock  dividend,  substance  and  not  form  is 
regarded,  and  often  it  is  difficult  to  decide  to  which 
class  a  particular  dividend  belongs.  The  real  question 
is  whether  the  distribution  made  by  the  corporation  is  of 
money  to  be  taken  and  used  as  income,  or  of  capital 
to  be  retained  in  some  form  as  an  investment  in  the 
corporation." 

This  rule  rests  not  only  on  the  assumption  that  the 
corporation  has  the  right  to  determine  how  much  of  its 
earnings  should  be  capitalized  or  properly  set  aside  to 
cover  depreciation  or  extensions,  but  even  more  on  the 
practical  impossibility  of  the  determination  of  those  ques- 
tions by  the  court.1 

Hence  the  decision  of  the  directors  is  final  as  to  whether 
they  are  distributing  profits  as  such,  or  are  distributing 
stock  as  the  evidence  of  profits  which  have  been  made 
capital,  and  their  decision  of  these  questions  is  to  be 
gathered  mainly  from  the  language  of  the  vote  by  which 
the  dividend  is  made.2 

In  the  application  of  this  rule  it  has  been  decided  that 
a  dividend  cannot  be  divided,  and  is  either  all  principal  or 
all  income ; 8  that  a  distribution  of  stock  representing  ac- 
cumulated earnings  is  principal.4 

So,  too,  a  distribution  of  bonds  which  were  indefinite 
as  to  time  of  payment,  and  were  in  effect  a  sort  of  pre- 
ferred stock,  were  held  to  be  principal ; 6  but  where  the 

1  Smith  v.  Dana,  77  Conn.  543.    The  life  tenant  is  not  injured, 
since  he  profits  by  the  increased  efficiency.     Granger  v.  Bassett,  98 
Mass.  462. 

2  D'Ooge  v.  Leeds,  176  Mass.  558,  p.  560. 

8  Minot  v.  Paine,  99  Mass.  101 ;  De  Keren  v.  AIsop,  205  HI.  309 ; 
Second  Uuiversalist  Church  v.  Colgrove,  74  Conn.  79 ;  Gifford  v. 
Thompson,  115  Mass.  478. 

4  Minot  r.  Paine.  99  Mass.  101 ;  Gibbons  v.  Mahon,  136  U.  S.  549  ; 
De  Koven  v.  Alsop,  205  111.  309. 

6  D'Ooge  i'.  Leeds,  176  Mass.  558. 

9 


130  EXTRA    DIVIDENDS 

distribution  was  of  stock  purchased  out  of  earnings,  it 
was  held  to  be  a  distribution  of  earnings,  and  not  a 
"  stock  dividend  "  in  any  proper  sense  of  the  words,  and 
so  belonged  to  income.1 

On  the  other  hand,  a  cash  dividend,  though  paid  from 
earnings  accumulated  before  the  beginning  of  the  trust, 
was  held  to  be  income.2  So,  too,  a  cash  dividend  which 
was  paid  simultaneously  with  and  to  the  same  amount  as 
the  cost  of  subscription  to  new  stock  was  held  to  be  in- 
come where  the  dividend  and  the  subscription  were  sever- 
able  and  the  stockholder  might  take  his  dividend  but  refuse 
to  subscribe  to  the  stock,8  although  the  whole  transaction 
was  obviously  a  way  of  making  a  free  distribution  of  stock 
to  the  stockholders,  and  making  it  full  paid  stock  to  meet 
the  legal  requirements  in  that  respect.  Where,  however, 
the  right  to  subscribe  to  the  new  stock  and  the  dividend 
could  not  be  severed,  and  the  stockholder  had  no  option 
but  was  obliged  to  take  the  stock  and  use  his  dividend  in 
payment  for  it,  the  dividend  was  held  to  be  a  stock  divi- 
dend, and  therefore  principal.4 

The  rule  that  the  determination  of  the  corporation  de- 
cides the  character  of  the  distribution  applies  to  dividends 
in  liquidation.  If  there  is  no  apportionment  made  by  the 
corporation,  the  whole  amount  distributed  will  be  con- 
sidered capital ; 6  but  if  the  directors  distribute  part  of 
the  funds  as  accumulated  earnings  not  permanently  added 
to  capital,  they  will  be  income  to  the  life  beneficiary.6  In 
this  case  the  company  was  not  actually  liquidated,  but 
was  absorbed  by  another  company  through  a  banker  who 

1  Leland  v.  Hayden,  102  Mass.  542 ;  Green  v.  Bissell,  65  Atl.  R.  1056. 

2  De  Koven  v.  Alsop,  205  111.  309. 

8  Davis  v.  Jackson,  152  Mass.  58;  Lyman  v.  Pratt,  183  Mass.  58; 
Waterman  v.  Alden,  42  111.  App.  294. 

4  Rand  v.  Hubbell,  115  Mass.  461  ;  Daland  v.  Williams,  101  Mass. 
571 ;  Curtis  v.  Oborne,  65  Atl.  R.  968. 

6  Gifford  v.  Thompson,  115  Mass.  478  ;  Second  Universalist  Church 
v.  Colgrove,  74  Conn.  79;  Mercer  v.  Buchanan,  132  Fed.  501. 

6  Hemenway  v.  Hemenway,  181  Mass.  406. 


EXTRA    DIVIDENDS  131 

bought  all  the  stock  at  a  certain  price,  but  left  certain 
quick  assets  in  the  hands  of  the  directors,  which  they  de- 
cided did  not  form  part  of  the  capital  and  so  distributed 
as  profits.  Some  stress  was  laid  by  the  court  on  the  fact 
that  the  company  was  sold  as  "  a  going  concern  ; "  but  it 
does  not  seem  as  though  this  could  really  make  any  differ- 
ence, for  the  company  was  liquidated  so  far  as  the  stock- 
holders' interest  was  concerned.  On  precisely  the  same 
facts,  both  the  amount  paid  for  the  stock  and  the  dividend 
were  held  to  be  principal  by  the  Connecticut  court,  though 
applying  the  same  rule.1  As  is  said  in  a  later  case  in  that 
State,  the  rule  must  yield  where  the  result  of  its  applica- 
tion is  inequitable ; 2  and  in  Hemenway  v.  Hemenway 8 
the  court  says  that  equity  will  look  at  the  substance  of 
the  transaction. 

The  evident  injustice  often  worked  by  the  Massachusetts 
rule  has  overweighed  the  convenience  of  having  a  definite 
working  rule  for  the  trustee  to  go  by,  and  has  led  to  some 
curious  and  inconsistent  law. 

The  desirability  of  making  a  fair  division  of  extra 
dividends  between  life  tenant  and  remainderman  has  led 
many  courts  to  deny  the  right  of  the  corporation  to  de- 
termine, so  far  as  this  class  of  stockholders  is  concerned, 
how  much  of  the  surplus  earnings  are  profits  and  how 
much  proper  reserves  for  renewals  and  additions  to 
capital.* 

Having  ascertained  these  facts  independently  of  the 
corporate  action,  the  court  will  then  apportion  the  divi- 
dend according  to  the  equitable  rights  of  the  tenant 
for  life  and  remainderman  to  the  profits  in  exactly  the 
same  manner  as  though  the  corporation  was  a  trustee 
for  its  stockholders. 

1  Second  Universalist  Church  v.  Colgrove,  74  Conn.  79. 

2  Smith  v.  Dana,  77  Conn.  543,  pp.  551,  556. 

*  181  Mass.  486,  p.  408. 

*  Earp's  Appeal,  28  Pa.  St.  368;  Van  Doren  v.  Olden,  19  N.  J.  Eq. 
176,  97  Amer.  Dec.  650;  Lord  v.  Brooks,  52  N.  H.  72 ;  Cobb  v.  Fant, 
36  S.  C.  1 ;  Pritchett  v.  Nashville  Trust  Co.,  96  Tenn.  472. 


132  EXTRA    DIVIDENDS 

The  courts  have  never  pushed  the  principle  beyond  ap- 
portioning the  dividend  between  the  parties  who  have  a 
beneficial  interest  in  the  stock  at  the  time  the  dividend  is 
declared.  No  part  of  a  dividend  will  be  given  to  the 
estate  of  a  deceased  beneficiary.1  Nor  will  the  court  give 
any  part  of  the  increased  market  price  of  the  stock  on 
account  of  accumulated  earnings  to  the  life  tenant,2  nor 
can  it  force  the  company  to  divide  its  earnings,8  but 
recognizes  that  as  between  the  corporation  and  the  stock- 
holders the  directors'  decisions  are  final.4 

With  these  equitable  considerations  as  a  foundation, 
but  disregarding  the  anomalies  and  practical  difficulties, 
the  Pennsylvania  rule  is  that  all  the  company's  earnings 
belong  to  the  person  who  was  entitled  to  the  income  during 
the  period  when  the  money  was  earned,  whether  declared 
in  dividends  or  not.5  It  follows  that  the  form  in  which 
a  dividend  is  declared,  whether  in  stock  or  cash,  is  im- 
material.6 If  stock  is  issued  to  represent  accumulated 
earnings,  it  can  be  sold  to  produce  the  same  amount  as 
though  the  accumulations  had  been  divided  in  cash.7 

The  period  during  which  earnings  were  accumulated 
is  to  be  gathered  from  the  company's  accounts  as  shown 
in  their  published  statements,8  and  by  the  variation  of 
the  value  of  the  stock,  which  is  assumed  to  vary  exactly 
with  the  amount  of  accumulated  surplus ; 9  and  a  master 
may  be  appointed  to  ascertain  the  facts.10  In  New  Jersey 

1  Bates  v.  McKinlay,  31  Beav.  280. 

2  Connolly's  Estate,  198  Pa.  St.  137. 

3  Pratt  v.  Pratt,  33  Conn.  446. 

*  Kite's  Devisees  v.  Kite's  Ex'rs,  93  Ky.  257-265. 

5  Earp's  Appeal,  28  Pa.  St.  368. 

6  Vinton's  Appeal,  99  Pa.  St.  434. 

7  Smith's  Estate,  140  Pa.  St.  344. 

8  Earp's  Appeal,  28  Pa.  St.  368 ;  Thomas  v.  Gregg,  78  Md.  545. 

9  Earp's  Appeal,  28  Pa.  St.  344 ;  Smith's  Estate,  140  Pa.  St.  344, 
p.  357.    Howes,  Income  and  Principal,  p.  29.    Common  experience 
indicates  that  this  assumption  is  contrary  to  fact.    The  "  value,"  that 
is,  market  price,  depends  on  many  other  considerations  besides  ac- 
cumulated surplus.  10  Van  Doren  v.  Olden,  19  N.  J.  Eq.  176. 


EXTRA    DIVIDENDS  133 

the  proportion  of  time  is  taken  since  the  last  dividend  was 
declared.1 

The  Pennsylvania  rule  is  followed  in  New  Jersey,  New 
Hampshire,  and  South  Carolina.2  In  Maryland  this  rule 
was  followed  in  Thomas  v.  Gregg,8  but  in  Quinn  v.  Safe 
Deposit  and  Trust  Co.4  the  action  of  the  directors  in  de- 
termining how  much  of  the  accumulated  fund  was  income 
and  how  much  was  principal  was  approved  and  followed, 
although  substantially  the  whole  fund  was  accumulated  be- 
fore the  commencement  of  the  trust.  Applying  this  rule, 
the  courts  have  decided  that  dividends,  whether  stock  or 
cash,  may  be  divided  and  apportioned,5  and  that  earnings 
accumulated  during  the  testator's  lifetime  or  before  the 
beginning  of  the  trust  are  principal.6 

In  New  York  a  modification  of  the  Pennsylvania  rule 
was  established  by  the  case  of  McLouth  u.  Hunt7  and 
confirmed  in  Lowry  v.  Farmers'  Loan  &  Trust  Co.8 
This  rule  is  that  the  dividend,  either  stock  or  cash,  will 
not  be  apportioned  as  to  the  time  when  it  is  earned,  but 
if  it  is  based  on  accumulated  earnings  or  profits  it  is 
income,  not  capital.  That  the  testator's  intent  must  be 
discovered,  and  that  the  action  of  the  corporation,  while 
having  great  weight,  is  not  conclusive  on  the  court.9 
Each  case  stands  on  its  own  merits.10 

In  a  well-considered  case  in  Kentucky,11  the  court  recog- 
nizes that  the  directors'  action  must  be  final  as  between 

1  Lang  v.  Lang's  Ex'rs,  57  N.  J.  Eq.  325. 

2  Van  Doren  v.  Olden,  19  N.  J.  Eq.  176,  97  Amer.  Dec.  650;  Lang's 
Ex'rs  v.  Lang,  56  N.  J.  Eq.  603 ;  Lord  v.  Brooks,  52  N.  H.  72 ;   Price 
v.  Burroughs,  58  N.  H.  302;  Holbrook  v.  Holbrook,  66  Atl.  K.  124; 
Cobb  v.  Faiit,  36  S.  C.  1.  8  78  Md.  545. 

*  93  Md.  285.  6  Earp's  Appeal,  28  Pa.  St.  278,  p.  375. 

6  Thomas  v.  Gregg,  78   Md.  545;    Nice's  Appeal,    54   Pa.   200; 
Smith's  Estate,  140  Pa.  St.  344,  p.  352. 

7  154  N.  Y.  179.  8  172  N.  Y.  137. 

9  Lowry  v.  Farmers'  Loan  &  Trust  Co.,  172  N.  Y.  137  ;  Stewart 
v.  Phelps,  173  N.  Y.  621. 

10  McLouth  v  Hunt,  154  N.  Y.  179,  p.  189;  Rdbertson  v.  De  Brula- 
tour,  188  N.  Y.  301.  "  Kite's  Devisees  v.  Hite's  Ex'rs,  93  Ky.  257. 


134  EXTRA    DIVIDENDS 

the  stockholder  and  the  corporation,  and  does  not  attempt 
to  apportion  the  dividend,  but  declines  to  permit  the  cor- 
poration to  decide  to  whom  a  dividend  shall  belong  as 
between  the  life  tenant  and  remainderman,  and  finally  de- 
cides the  case  on  its  merits  without  attempting  to  lay 
down  any  settled  rule.  In  other  jurisdictions  the  question 
has  been  similarly  treated  ; l  and  in  general,  where  no  rule 
has  been  adopted,  the  trustee  should  take  the  direction  of 
the  court  as  to  the  disposition  of  the  dividend. 

The  right  to  subscribe  for  new  stock,  whether  availed 
of  or  sold  for  cash,  is  generally  held  in  all  jurisdictions, 
irrespective  of  rules  governing  extra  dividends,  to  be 
principal.2  The  granting  of  such  a  right  is  really  not 
a  ' '  dividend, "  properly  speaking,  at  all,  though  often 
called  so  in  discussing  these  questions. 

Many  settlements  to-day  expressly  provide  that  the 
trustee  shall  in  his  uncontrolled  discretion  pay  the  divi- 
dend to  the  life  tenant  or  remainderman,  or  apportion  it 
between  them,  as  equity  may  require.  The  New  York 
court  affirmed  the  trustee's  action  in  such  a  case,  where 
he  seemed  to  have  acted  faithfully  and  discreetly.3 

The  Massachusetts  rule  is  too  arbitrary  and  the  Penn- 
s}Tlvania  rule  too  impracticable  to  make  them  good  working 
rules,  while  it  is  too  expensive  and  involves  too  much  de- 
lay to  apply  to  the  court  for  instructions  in  each  case; 
and  therefore  provision  by  the  settlement  or  by  statute 
would  seem  desirable,  leaving  the  matter  to  the  trustee's 
discretion. 

1  Pritchett  v.  Nashville  Trust  Co.,  96  Term.  472 ;  Greene  v.  Smith, 
17  R.  I.  28;  Brown,  Pet'r,  14  R.  I.  371. 

2  Atkins  v.  Albree,  12  Allen,  359  ;  Eidman  v.  Bowman,  58  111.  444 ; 
De  Koven  t>.  Alsop,  205  111.  309 ;  Greene  v.  Smith,  17  R.  I.  28 ;  Brinley 
v.  Grou,  50  Conn.  66 ;  Hite's  Devisees  v.  Kite's  Ex'rs,  93  Ky.  257,  p.  267  ; 
Pierce  v.  Boroughs,  58  N.  H.  302.    The  word  "generally"  was  used 
advisedly,  as  in  Pennsylvania  there  are  decisions  both  ways.     Biddle'a 
Appeal,  99  Pa.  St.  278 ;  In  re  Kemble's  Estate,  201  Pa.  St.  523 ;  Wilt- 
bank's  Appeal,  64  Pa.  St.  256  ;  Eisnew's  Appeal,  175  Pa.  St.  143.    See 
also  Holbrook  v.  Holbrook,  66  Atl.  R.  124. 

8  In  re  Biting,  33  Misc.  (N.  Y.)  675. 


ORDINARY   DIVIDENDS   NOT  APPORTIONED          135 

Ordinary  Dividends  not  Apportioned.  —  No  part  of 
a  company's  property  belongs  to  a  stockholder  until  it  is 
separated  and  declared  as  a  dividend ;  hence  a  dividend  is 
an  independent  debt  payable  to  the  stockholders  of  a  cer- 
tain day,  and  remains  principal  until  separated  from  the 
other  funds  and  declared  payable  to  the  stockholders,1 
and  therefore  is  never  apportionable,  and  is  always  pay- 
able, no  matter  when  paid,  to  the  stockholder  entitled  at 
the  time  specified  in  the  vote ; 2  but  if  the  trustee  sold 
a  stock  just  before  the  dividend  day  to  defraud  the  life 
tenant  or  buy  land  according  to  the  terms  of  the  trust 
instrument,8  the  life  beneficiary  would  be  entitled  to  so 
much  of  the  proceeds  as  would  equal  the  dividend  lost 
by  the  sale. 

Delayed  Dividends.  —  Where  the  dividends  on  stock 
are  cumulative,  and  not  paid  when  due  but  paid  in  full 
at  a  later  date,  it  has  been  held  that  they  should  be 
apportioned  among  the  persons  to  whom  they  would  have 
been  paid  had  they  been  paid  when  due,  even  including 
the  estate  of  a  deceased  beneficiary ; 4  but  this  decision 
is  so  contrary  to  the  principles  already  discussed  that  it 
is  doubtful  whether  it  would  be  followed.  It  is  more 
ingenious  than  convincing  to  argue  that  a  dividend  is 
severed  from  the  corporate  funds  by  being  made  cumu- 
lative in  the  charter.6 

Interest  sometimes  Apportioned.  —  All  rents  and 
generally  the  whole  amount  received  as  interest  is  in- 

1  Lowell,  Transfer  of  Stock,  §  52,  n.  3,  authorities ;  Perry,  §  545  ; 
Granger  v.  Bassett,  98  Mass.  462 ;  Bates  v.  McKinley,  31  Beav.  280 ; 
De  Koven  v.  Alsop,  205  111.  309. 

2  McKeen's  Appeal,  42  Pa.  St.  479  ;  Johnson  v.  Bridgewater  Mfg. 
Co.,  14  Gray,  274  ;  Kite's  Devisees  v.  Kite's  Ex'rs,   93  Ky.  257  ;  but 
see  Clive  v.  Clive,  Kay,  600,  contra,  and  Lang  v.  Lang' s  Ex'rs,  57 
N.  J.  Eq.  325,  where  dividends  are  apportioned  like  interest. 

8  Londesborough  v.  Somerville,  19  Beav.  295. 

*  Meldrim  v.  Trnstees  of  Trinity  Church,  100  Ga.  479. 

6  See  pages  128  et  seq.,  supra.    Howes,  Income  and  Principal,  p.  18. 


136  INTEREST    SOMETIMES   APPORTIONED 

come,  and  in  England  the  rule  is  not  subject  to  any 
exception.1 

In  some  States,  if  a  bond  is  purchased  at  a  premium, 
sufficient  of  the  interest  must  be  set  aside  yearly  to  wipe 
out  the  premium  at  the  maturity  of  the  obligation,  since 
a  bond  purchased  at  a  premium  is  a  wasting  security, 
which  would  otherwise,  out  of  justice  to  the  remainder- 
man, be  converted ; 2  but  it  follows  that  no  part  of  the 
interest  on  a  bond  which  is  part  of  the  property  originally 
settled  need  be  credited  to  principal,  since  there  is  no 
obligation  to  convert  the  bond,  even  though  it  be  worth 
more  than  par.8 

The  practice  of  buying  bonds  which  sell  at  a  discount, 
to  balance  those  bought  at  a  premium,  is  not  sound,  as 
the  difference  of  price  is  not  simply  a  question  of  interest, 
but  is  more  often  one  of  security,  nor  can  the  loss  on  one 
investment  be  set  off  against  the  gain  on  another.4 

Interest  accrues  from  day  to  day,  and  will  therefore 
be  apportioned  upon  a  sale  of  the  security  on  which  it 
accrues,  or  upon  the  termination  of  the  life  estate.6  The 
interest  accruing  up  to  the  date  of  sale  or  death  being 
income,  and  the  balance  belonging  to,  and  being  part  of, 
the  security  turned  over.  And  this  is  the  rule  even  where 
the  debt  is  secured  by  a  bond  or  mortgage.6  But  where  the 
interest  is  payable  by  a  coupon,  which  might  be  detached 
and  sold  separately,7  and  would  then  be  a  separate  bond, 

1  Hemenway  v.  Hemenway,  134  Mass.  446,  450. 

2  Ibid. ;  In  re  Allis's  Estate,  123  Wis.  223 ;  Curtis  v.  Osborn,  65  Atl 
R.  968 ;  In  re  Hoyt,  27  App.  Div.  (N.  Y.)  285 ;  N.  Y.  Life  Ins.  &  Trust 
Co.  v.  Baker,  38  App.  Div.  (N.  Y.)  417.     But  the  rule  in  New  York 
seems  to  depend  largely  on  the  consideration  of  each  case.     N.  Y.  Life 
Ins.  &  Trust  Co.  v.  Baker,  165  N.  Y.  484  ;  In  re  Stevens,  111  App.  Div. 
(N.  Y.)  773.     No  sinking  fund  in  Kentucky  and  Pennsylvania.     Kite's 
Devisees  v.  Kite's  Ex'rs,  ubi  supra ;  Beyer's  Estate,  44  W.  N.  C.  528, 
Orphans'  Ct.,  Phila.,  1899. 

8  Shaw  v.  Cordis,  143  Mass.  443.  *  Infra,  p.  154. 

5  Dexter  v.  Phillips,  121  Mass.  178. 

6  Dexter  v.  Phillips,  121  Mass.  178. 

»  Clark  v.  Iowa  City,  20  Wall.  583,  589. 


INTEREST   SOMETIMES   APPORTIONED  137 

the  rule,  in  the  absence  of  statute,,  is  otherwise,  and  there 
is  no  apportionment ;  but  where  the  statute  exists,  even 
coupons  are  apportioned.1 

In  some  jurisdictions  there  are  statutes  apportioning 
rents  and  coupons  and  annuities  on  the  termination  of  a 
life  estate  settled  by  will.2  This  statute  does  not  apply 
to  settlements  made  by  deed,  which  are  governed  by  the 
common  law. 

Payments.  —  Any  loss  to  the  fund  by  depreciation  of 
the  market  value  of  the  property  belongs  to  principal, 
and  a  loss  occasioned  by  a  breach  of  trust  stands  on  the 
same  footing.8 

Discharge  of  Encumbrance.  —  If  there  is  an  encum- 
brance on  the  estate,  as,  for  instance,  a  mortgage,  if  at 
once  discharged  it  is  paid  from  the  remainder,  but  if 
carried  4  the  interest  is  chargeable  to  income,  and  the 
principal  to  the  corpus  of  the  fund,  and  this  is  true  even 
when  the  estate  is  not  charged  until  a  long  period  —  say 
ten  years  —  after  the  settlement.5 

Similarly,  where  the  trustees  are  compelled  to  discharge 
an  involuntary  encumbrance,  such  as  a  betterment  assess- 
ment 6  or  judgment,  the  cost  is  apportioned  between  in- 
come and  principal.  The  whole  amount  is  charged  to 
principal  and  deducted  from  the  estate  of  the  remainder- 
man, and  the  income  is  charged  interest  thereon  yearly, 
or  the  interest  may  be  funded  and  charged  in  a  lump ;  or 
if  the  life  tenant  and  remainderman  are  beneficiaries  of 
the  same  funds,  the  principal  is  paid  out  of  the  corpus, 
and  the  life  tenant  loses  interest  and  the  remainderman 
the  principal. 

1  Adams  v.  Adams,  139  Mass.  449. 

2  Mass.  Rev.  Laws  (1902),  ch.  141,  §  25. 

*  Parsons  v.  Winslow,  16  Mass.  361.    See  p.  124,  supra. 

4  Van  Vronker  r.  Eastman,  7  Met.  157. 

6  Maclaren  v.  Stainton,  L.  R.  11  Eq.  382. 

6  A  betterment  assessment  is  a  tax,  but  not  an  ordinary  one,  and 
as  between  life  tenant  and  remainderman  is  treated  as  an  encumbrance. 
Plympton  v.  Boston  Dispensary,  106  Mass.  544. 


138  ALTERATIONS   AND   REPAIRS 

Alterations  and  Repairs.  —  Alterations  and  additions 
to  real  estate  whereby  the  usefulness  or  rental  value  is 
increased  are  chargeable  to  principal,1  but  the  repairs 
or  expenditures  which  are  necessary  to  maintain  the 
property  in  its  previous  condition  are  chargeable  to 
income.2 

It  is  often  a  difficult  question  of  fact  to  decide  whether 
a  specified  expenditure  is  an  addition  to  the  property  or  a 
current  repair  ;  but  the  rule  may  be  stated  that,  where  re- 
pairs improve  the  property  to  the  extent  of  their  cost,  they 
are  chargeable  to  principal,  and  are  a  judicious  investment 
of  the  trust  funds.8 

For  instance,  replacing  ruinous  buildings  which  have 
been  condemned,4  or  putting  in  new  foundations  and  add- 
ing fire  escapes  when  required  by  the  city,5  and  the  addition 
of  an  elevator  to  a  building  which  previously  had  none 
will  be  charged  to  principal,  while  putting  in  a  new  ele- 
vator in  the  place  of  an  old  one  will  be  a  repair  chargeable 
to  income.6 

So  also  an  expenditure  may  be  in  the  nature  of  both  an 
addition  and  a  repair,  and  is  then  chargeable  to  principal 
only  to  the  extent  to  which  it  benefits  the  property ;  and 
in  some  States 7  there  are  statutes  allowing  an  apportion- 

1  Sohier  v.  Eldredge,  103  Mass.  345 ;  Caldecott  v.  Brown,  2  Hare, 
144. 

2  Underbill,  pp.  250,^251,  states  that  in  the  absence  of  express  pro- 
vision in  the  settlement  the  equitable  life  tenant  is  not  bound  to  repair, 
and  so  all  repairs  should  be  made  under  order  of  court  and  appor- 
tioned by  it.     The  English  cases  have  arisen  almost  exclusively  where 
the  property  was  in  the  possession  of  the  equitable  life  tenant,  and  not 
being  managed  as  an   investment  by  the  trustees,  as  is  general  in 
America.    Lewin,  pp.  642,  644.     In  America  the  rule  is  as  stated  in 
the  text,   and  a  trustee  should  charge  necessary  current  repairs  to 
income.    Parsons  v.  Winslow,   16  Mass.  361 ;  Hepburn  v.  Hepburn, 
2  Bradf.  (N.  Y.)  74;  Little  v.  Little,  161  Mass.  188. 

8  Sohier  v.  Eldredge,  103  Mass.  345 ;  In  re  Parr,  92  N.  Y.  S.  990. 

*  Smith  P.  Keteltas,  32  Misc.  Rep.  (X.  Y.)  111. 

6  In  re  Parr,  45  Misc.  Rep.  (N.  Y.)  564 ;  affd,  100  N.  Y.  Supp.  1133. 

•  Little  v.  Little,  161  Mass.  188.  7  Pennsylvania. 


ALTERATIONS    AND   REPAIRS  139 

ment  in  such  cases.  The  decision  of  the  trustee  in  ap- 
portioning the  expense,  if  made  with  reasonable  discretion, 
will  be  upheld  by  the  court ; 1  but  in  doubtful  cases  it  is 
well  to  get  the  instructions  of  the  court  before  under- 
taking an  extensive  job,  which,  if  charged  wholly  to  the 
income,  might  be  very  burdensome.2 

All  expenditures  on  newly  acquired  property  which  are 
necessary  to  put  it  in  condition  to  let  or  to  hold,  whether 
they  are  in  the  nature  of  repairs  or  additions,  are  charge- 
able to  principal.  For  instance,  fencing  in  land  or  repair- 
ing a  house  to  obtain  a  tenant.  These  expenses,  although 
chargeable  to  income  at  other  times,  on  the  acquisition  of 
a  new  estate  will  be  considered  as  so  much  additional 
purchase  money,  and  chargeable  to  principal.8 

All  ordinary  current  expenses  are  charged  to  income. 
Shaw,  C.  J.,  says  income  means  net  income  after  deduct- 
ing taxes,  repairs,  and  ordinary  current  expenses ; 4  current 
expenses  are  now 5  considered  to  include  insurance,  and 
in  some  jurisdictions  the  premiums  paid  for  securities.6 

Taxes.  —  All  annual  taxes,  except  those  assessed  on 
vacant  land,  are  charged  to  income.7  The  whole  tax  for 
the  year  is  chargeable  to  the  tenant  enjoying  the  property 
at  the  time  when  the  tax  is  assessed.8  Legacy  taxes  on 
the  life  interest  are  to  be  deducted  from  income,  although 
the  executor  may  have  turned  over  the  estate  in  one  lump.9 
As  vacant  land  gives  no  return  to  the  life  tenant,  but  his 
whole  income  might  be  used  in  preserving  the  property  of 

1  Jordan  v.  Jordan,  192  Mass.  337,  p.  343. 
a  Caldecott  v.  Brown,  2  Hare,  144. 

3  Parsons  v.  Winslow,  16  Mass.  361  ;  N.  Eng.  Trust  Co.  v.  Eaton, 
140  Mass.  532. 

*  Watts  v.  Howard,  7  Met.  478;  Bridge  v.  Bridge,  146  Mass.  373. 
6  Jordan  v.  Jordan,  192  Mass.  337,  p.  344. 

6  New  York  Life  Ins.  Co.  v.  Sands,  53  N.  Y.  S.  320.     Supra,  p.  136. 

7  Plympton  v.  Dispensary,  106  Mass.  544;  Hildenbrandt  v.  Wolff, 
79  Mo.  App.  333. 

8  Holmes  v.  Taber,  9  Allen,  246. 

•  Fitzgerald  v.  R.  I.  Hosp.  Trust  Co.,  24  R.  I.  59. 


140  TAXES 

the  remainderman,1  all  charges  against  it,  including  taxes, 
are  chargeable  to  principal.2  The  taxes  on  a  dwelling- 
house  given  for  life  are  payable  by  the  occupier,  and  not 
from  the  general  income,  in  the  absence  of  the  manifesta- 
tion of  a  contrary  intention.8 

Special  assessments,  such  as  betterment  assessments, 
sewer  taxes,  etc.,  are  chargeable  to  principal  or  are  ap- 
portioned as  specified.4 

Insurance.  —  Insurance  premiums  are  expressly  charge- 
able to  income  by  the  terms  of  most  carefully  drawn  trust 
instruments,  and  where  no  express  provision  is  made  in 
the  instrument  the  general  practice  is  to  charge  them  to 
income.6 

1  Stone  v.  Littlefield,  151  Mass.  485;  Underbill,  p.  246,  n. 

2 -Pierce  v.  Burroughs,  58  N.  H.  302;  Stone  v.  Littlefield,  151  Mass. 
485  ;  Hite's  Devisees  v.  Kite's  Ex'rs,  93  Ky.  257  ;  Trenton  Trust  Co. 
v.  Donelly,  65  N.  J.  Eq.  119;  In  re  Pitney,  113  App.  Div.  (N.  Y.)  845; 
Edwards  v.  Edwards,  183  Mass.,  581. 

8  Wiggin  v.  Swett,  6  Met.  194  ;  Amory  v.  Lowell,  104  Mass.  265. 

4  Plympton  v.  Dispensary,  106  Mass.  544. 

5  There  is  singularly  little  authority  on  the  question.    Probably  be- 
cause in  early  times  and  in  England  insurance  was  not  considered  a 
necessary  precaution  of  an  ordinarily  cautious  man,  and  because  fail- 
ure to  insure  by  a  life  tenant  is  not  permissive  waste  (Harrison  v. 
Pepper,  166  Mass.  288),  and  unfortunately  what  authority  there  is  is 
conflicting.     In  Graham  v.  Roberts,  8  Ired.  Eq.  99,  the  court  expresses 
the  opinion,  and  in  the  New  York  case,  Re  Housman,  4  Dem.  Sur.  404, 
the  court  decides,  on  the  authority  of  Peck  v.  Sherwood,  56  N.  Y. 
615  (in  which  no   reason   is  stated),  that  the  premiums  are  appor- 
tionable  according  to  the  respective  interests  of  the  life  tenant  and 
remaindermen,  and  Perry,  §  487,  says  that,  there  being  no  obligation 
to  insure,  the  premium  should  not   be   charged   to   the  life  tenant 
without  his  consent.     See  also  Wiggin  v.  Swett,  6  Met.   194.     On  the 
other  hand,  in  Darcy  v.  Croft,  9  Ir.  Ch.  19,  in  a  carefully  considered 
opinion,  the  cost  of  insuring  the  life  of  the  annuitant  was  held  charge- 
able to  income,  and  this  case  seems  to  state  the  true  reason,  which  is 
that  the  income  is  chargeable  with  all  the  ordinary  annual  expenses  of 
maintaining  the  property  (see  Shaw,  C.  J.,  Watts  v.  Howard,  7  Met. 
478,  482),  of  which  insurance  is  now  like  repairs  and  taxes,  one  of  the 
ordinary  and  necessary  incidents  of  maintaining  real  estate.     (S«e 


INSURANCE  141 

In  case  of  a  partial  loss,  the  funds  recovered  would  be 
used  in  repairing.1  In  case  of  a  total  loss,  the  fund  should 
be  invested,2  and  could  be  used  in  rebuilding  if  such  an 
investment  is  authorized,  and  will  retain  its  character  as 
real  estate,  although  it  may  be  otherwise  where  the  insur- 
ance existed  at  the  time  of  the  will,  as  in  such  case  the 
policy  was  a  personal  asset  at  the  outset.8 

If  the  life  tenant  insures  the  property,  the  remainderman 
has  no  claim  on  the  fund  recovered,  the  contract  of  insur- 
ance being  merely  to  indemnify  the  individual  for  his  loss. 
The  fund  recovered  does  not  represent  or  stand  in  the  place 
of  the  building  destroyed.4  But  where  a  trustee  insures 
the  building,  he  will  insure  all  his  interest  which  is  subject 
to  the  claim  of  both  life  tenant  and  remainderman,  and  in 
such  case  the  fund  recovered  would  stand  in  the  place  of 
the  property  destroyed  as  the  property  of  the  remainder- 
man of  which  the  life  tenant  has  the  use.6 

Expenses.8  —  The  charges  of  the  trustees  for  managing 
the  property,  which  are  by  the  way  of  a  commission  on 
income,  are  charged  to  income.  Extra  charges  for  ser- 
vices which  are  beneficial  to  the  fund  are  charged  to 
principal,  or  may  be  apportioned  equitably.7 

Jordan  v.  Jordan,  192  Mass.  337,  p.  344,  and  Bridge  v.  Bridge,  146 
Mass.  373.)  The  ordinary  practice  of  charging  the  premiums  to  in- 
come is  entirely  consonant  with  the  theories  of  law,  and  with  the  law 
as  now  enacted  by  statute  in  England.  Trustees  Act,  1893,  §  18. 

1  Brough  v.  Higgins,  2  Gratt.  408. 

3  Lerow  r.'.Wilmarth,  9  Allen,  382. 

8  Haxall's  Ex'rs  v.  Shippen,  10  Leigh,  536.  In  that  case,  the  life 
tenant  gave  bond  to  invest  money  and  pay  over  on  death  of  life  tenant, 
hence  had  no  right  to  convert. 

*  Harrison  v.  Pepper,  166  Mass.  288. 

5  Graham  v.  Roberts,  8  Ired.  Eq.  99 ;   Haxall's  Ex're  v.  Shippen, 
10  Leigh,  536 ;  Re  Housman,  4  Dem.  Sur.  404. 

6  As  to  what  expenses  are  allowed,  see  supra,  p.  35. 

7  Kite's  Devisees  v.  Kite's  Ex'rs,  93  Ky.  257,  p.  269 ;  R.  L  Hoep. 
Trust  Co.  v.  Watermann,  23  R.  I.  342 ;  Gordon  v.  West,  8  N.  H.  444. 
But  see  Spangler's  Estate,  21  Pa.  St.  335,  where  such  charges  were 


142  EXPENSES 

Brokers'  commissions  on  change  of  investment,  where 
it  was  expressly  provided  that  all  expenses  were  to  be 
charged  to  income,  were  properly  classed  as  expenses 
and  charged  to  income,1  but  in  a  purchase  or  sale  of 
real  estate  the  brokers'  commission  is  in  practice  con- 
sidered as  part  of  the  price  of  the  property,  and  so  is 
generally  charged  to  principal,  and  would  probably  be 
allowed  so  generally ; 2  and  in  the  absence  of  expressed 
intention,  the  same  reasoning  would  seem  to  apply  to  the 
purchase  of  stocks  and  bonds. 

Legal  expenses  of  settling  the  interpretation  of  the 
trust  instrument,  the  cost  of  obtaining  the  instructions 
of  the  court,  or  appointment  of  new  trustees  are  borne  by 
the  principal,8  and  so  also  the  expenses  of  recovering  the 
fund  or  paying  it  out,  and  of  the  final  accounting.4  So 
also  the  legal  expenses  of  protecting  the  property;  but 
the  legal  expenses  of  collecting  the  income,  or  of  deter- 
mining the  matter  of  payments  chargeable  to  income,  fall 
naturally  to  income. 

The  Distribution  of  the  Trust  Fund.  —  The  trustee 
must  distribute  the  trust  fund  properly  at  his  peril,  and 
if  he  distributes  the  wrong  amount,  or  pays  it  to  the 
wrong  person,  must  bear  the  loss. 

The  fact  that  he  has  been  diligent  or  has  taken  advice 
will  not  save  him,  and  his  only  protection  is  to  obtain 
a  decree  of  distribution  from  the  court.  But  he  will 
be  protected  if,  in  paying  one  beneficiary  whose  share 

held  to  be  the  ordinary  charges  of  protecting  the  property,  and  so 
charged  to  income.     Underbill,  p.  246,  n.     Supra,  pp.  98,  99. 

1  Heard  v.  Eldredge,  109  Mass.  258. 

2  Smith  v.  Nones,  28  Ky.  Law  Reg.  248.  On  the  authority  of  Heard 
v.  Eldredge  and  the  supposed  custom  of  trustees  the  Massachusetts 
court   has   decided  that  brokers'   commissions   must  be  charged    to 
income.    Jordan  v.  Jordan,  192  Mass.  337,  p.  346.     By  statute  the  law 
is  now  in  accordance  with  the  text.     Acts  of  1907,  ch.  371. 

8  Howland  v.  Green,  108  Mass.  283.     Supra,  pp.  98,  99. 
*  Chisholm  v.  Hammersley,  114  App.  Div.  (N.  Y.)  565. 


THE    DISTRIBUTION   OP  THE  TRUST   FUND          143 

becomes  due  before  the  others,  he  pays  him  on  a  fair 
valuation  of  the  estate,  although  the  securities  depreciate 
so  that  the  others  get  less.1 

In  some  States  the  fund  itself  may  be  paid  into  court 
for  distribution ; 2  and  statutes  generally  exist  giving 
courts  of  probate  authority  to  decree  distribution  in  the 
case  of  testamentary  trusts. 

As  these  courts  have  the  custody  of  the  fund  itself,  and 
the  decree  is  against  the  property,  and  not  merely  against 
the  parties  to  the  suit,  all  persons  interested  need  not  be 
parties  in  order  to  give  the  court  jurisdiction,8  and  pro- 
vided the  proper  notices  have  been  given,  the  validity 
of  the  decree  cannot  be  questioned  by  any  form  of 
pleading  or  proof.4  The  notice  to  be  given  is  generally 
prescribed  by  statute,  or  in  the  absence  of  statute  by  the 
court.  Where  an  error  has  been  made  in  the  decree  as  to 
the  persons  entitled  to  distribution,  as  for  instance  where 
the  estate  has  been  divided  among  four  persons  instead  of 
five,  the  court  may  correct  its  decree  so  that  the  excess 
may  be  recovered  from  the  persons  who  have  been  over- 
paid, but  the  original  decree  will  stand  in  so  far  as  it 
protects  the  trustee,  and  he  will  not  be  liable  in  any 
event.6 

Where  the  proper  statutory  authority  does  not  exist,  or 
in  trusts  which  are  not  created  by  the  decree  of  a  probate 
court,  resort  may  be  had  to  a  court  of  equity  for  a  decree 
of  distribution.  In  such  suits  care  must  be  taken  to  make 
all  parties  interested  parties  to  the  suit,  or  they  will  not 

1  Frere  v.  Winslow,  45  Ch.  Div.  249. 

2  Annot.  Code,  Iowa  (1897),  §  370,  as  amended  1902;  Mont.  Code 
Civ.  Proc.  (1895),  §  970;  Bates's  Annot.  Ohio  Stat.  (1906),  §  5592; 
Rev.  Stat.  Okla.  (1903),  §  4446;  Rev.  Stat.  Wy.  (1899),  §4059. 

8  Minot  v.  Purrington,  190  Mass  336,  p.  340. 

4  Loring  Adm.  v.  Steineman  et  al.,  1  Met.  204 ;  Lamson  v.  Knowles, 
170  Mass.  295;  Pierce  v.  Prescott,  128  Mass.  140.  See  statutes 
passim. 

6  Harris  v.  Starkey,  176  Mass.  445 ;  Minot  v.  Purrington,  190  Mass. 
336 ;  Cleaveland  v.  Draper,  80  N.  E.  227  (Mass.  1907). 


144          THE    DISTRIBUTION   OP  THE   TRUST  FUND 

be  concluded,1  and  if  there  be  any  doubt  as  to  whether 
all  the  proper  parties  have  been  joined  the  trustee  may 
require  the  payees  to  give  security  to  reimburse  against 
any  claims  that  may  arise. 

The  common  practice  of  getting  a  final  account  show- 
ing a  distribution  allowed  by  the  court  is  objectionable, 
as  although  the  allowance  of  the  account  operates  as  a 
decree  against  all  parties  to  the  suit,2  it  is  not  conclusive 
on  all  the  world,8  and  a  share  improperly  paid  over  cannot 
be  recovered  back.4 

The  trustee  must  pay  the  distributive  shares  at  his 
peril  to  the  proper  distributees.  The  fact  that  he  pays 
on  a  forged  order,  or  an  invalid  assignment,6  or  on  a 
power  of  attorney  which  he  supposes  to  be  good,  but 
which  has  in  fact  been  revoked,  will  not  protect  him. 
Now,  by  statute  in  England,  a  trustee  paying  in  good 
faith  under  a  revoked  order  is  protected,6  but  the  law  is 
not  so  in  America. 

He  must  not  pay  a  minor's  share  to  himself  or  his 
parent  or  guardian  without  an  order  of  court,7  or  he 
may  be  required  to  pay  him  again  when  he  comes  of 
age. 

He  may  perpetuate  the  evidence  of  his  payments  by  an 
account  filed  in  court,  and  allowed  after  notice  to  all  inter- 
ested, or  under  statutory  law,  by  filing  the  vouchers  in 
court.8  The  former  course  is  preferable,  as  all  parties  to 

1  Cathaway  v.  Bowles,  136  Mass.  54 ;  Kendall  v.  DeForest,  101 
Fed.  R.  167. 

2  Emery  ».  Batchelder,  132  Mass.  452. 

8  Palmer  v.  Whitney,  166  Mass.  306.  There  are  statutes  in  some 
States  making  such  an  account  conclusive.  Mass.  Rev.  Laws,  ch. 
150,  §21. 

4  Hilliard  v.  Fulford,  4  Ch.  Div.  389. 

6  Palmer  v.  Whitney,  166  Mass.  306.  The  court  in  a  decree  of  dis- 
tribution will  not  pass  on  the  validity  of  assignments.  Lenz  v.  Prea- 
cott,  144  Mass.  505. 

6  Underbill,  p.  365. 

7  Perry,  §  624.     But  see  Sparhawk  v.  Buell,  9  Vt.  41. 

8  Mass.  Rev.  Laws  (1902),  ch.  150,  §  20. 


THE    DISTRIBUTION    OF   THE  TRUST   FUND  145 

the  suit  are  forever  barred  by  the  suit,  and  he  cannot  de- 
mand a  receipt  or  discharge  where  he  simply  follows  out 
the  distribution  according  to  the  terms  of  the  trust,  and 
cannot  refuse  to  pay  until  he  gets  a  receipt.1 

As  a  distribution  of  the  fund  without  a  decree  of  the 
court  or  a  decree  of  a  court  itself  is  an  overt  act,  the 
statute  of  limitations  will  begin  to  run  from  that  time.2 

If  the  trust  was  "to  convey"  or  "divide"  the  real 
estate,  a  conveyance  is  necessary,  and  a  power  of  sale  is 
implied  if  a  sale  is  necessary  to  divide  the  property,8  but 
a  conveyance  to  the  remaindermen  as  tenants  in  common 
may  be  all  that  is  necessary  to  "  equally  divide  "  the 
estate ;  *  otherwise,  real  estate  will  usually  vest  in  the 
distributees  by  the  provisions  of  the  instrument.6 

As  these  duties  are  so  onerous,  compensation  is  gener- 
ally allowed,  and  is  usually  two  and  a  half  or  one  per  cent 
on  the  amount  turned  over.6 

In  some  jurisdictions  the  amount  is  regulated  by 
statute. 

The  trustee  may  retain  the  funds  in  his  hands  until  the 
account  is  settled  and  he  has  been  paid  his  charges.7 

VI.  LIABILITIES. 

To  Strangers.  —  A  trustee  is  personally  liable  on  his 
contracts,  even  where  he  describes  himself  as  a  trustee  or 
adds  the  word  "trustee"  to  his  signature.8  He  may, 
however,  expressly  limit  his  liability  to  the  extent  of  the 

1  Chadwick  v.  Heatley,  2  Coll.  137.     Supra,  p.  91. 

2  Jones  v.  Home  Savings  Bank,  118  Mich.  155. 

8  Parker  v.  Seeley,  56  N.  J.  Eq.  110;  Davison  v.  Tarns,  30  Misc. 
Rep.  (N.  Y.)  156. 

*  How  v.  Waldron,  98  Mass.  281. 

8  Temple  v.  Ferguson,  110  Tenn.  84 ;  Morgan  v.  Moore,  3  Gray,  319. 

8  Supra,  p.  36. 

7  Foster  v.  Bailey,  157  Mass.  160  ;  Baring  v.  Willing.  4  Wash.  C.  C. 
248. 

8  Bowen  v.  Penny,  76  Ga.  743;  Taylor  v.  Davis,  110  U.  S.  330. 
Supra,  pp.  28,  78. 

10 


146  LIABILITY   TO   STRANGERS 

trust  estate,1  but  the  terms  of  the  contract  must  show 
clearly  that  the  contractor  relied  wholly  on  the  credit  of 
the  trust  estate  and  not  on  the  personal  credit  of  the 
trustee.2  Without  such  a  provision  the  trustee  will  be 
personally  liable  even  under  a  contract  ordered  by  the 
court ;  since  the  order  of  court  only  insures  his  right  to 
indemnity  from  the  trust  property,  and  does  not  affect  a 
stranger.8  He  is  also  liable  on  the  covenants  in  a  deed 
or  lease,  and  on  the  recitals  in  a  deed,  if  he  should  have 
special  knowledge  of  their  accuracy.* 

He  is  not  bound  to  give  information  to  strangers  with 
whom  the  beneficiary  is  negotiating  a  loan,  and  if  he  in- 
nocently makes  an  erroneous  representation,  is  not  liable 
therefor.5 

He  will  be  personally  liable  where  he  assumes  to  be 
a  trustee,  when  as  a  matter  of  fact,  owing  to  defective 
appointment  he  is  not  a  trustee,  and  in  such  cases  will 
have  no  right  to  indemnity  from  the  trust  property. 

If  he  exceeds  his  powers,  as  for  instance  in  selling  or 
leasing  to  a  stranger,  and  the  stranger  gets  no  title,  he 
will  be  liable  personally  and  individually  for  the  price, 
and  also  for  damages,  if  any.6 

He  is  liable  personally  as  stockholder  in  a  corporation,7 
and  for  taxes,8  and  in  tort  as  owner  of  the  property  to 
the  same  extent  as  though  the  ownership  was  individual.* 
In  all  these  cases  he  has  a  right  of  indemnity  from  the 
trust  fund  only  so  far  as  he  has  neglected  no  duty  and 
has  acted  strictly  within  his  powers. 

He  is  liable  criminally  for  embezzlement  if  he  mis- 
appropriates the  trust  funds,  even  though  under  the  pre- 

1  Taylor  v.  Davis,  ut  supra ;  Packard  v.  Kingman,  109  Mich.  497. 
8  Mitchell  v.  Whitlock,  121  N.  C.  166 ;  Connally  v.  Lyons,  82  Texas, 
664;  Mulrein  v.  Smillie,  25  App.  Div.  135  (N.  Y.). 

8  Gill  v.  Carmine,  55  Md.  339  ;.  Glenn  v.  Allison,  58  Md.  537. 

*  Lewin,  p.  211,  n. ;  Story  v.  Gape,  2  Jur.  (N.  s.)  706.    Supra,  p.  100. 

6  Low  v.  Bouverie,  3  Ch.  (1891)  82. 

6  Diamond  v.  Wheeler,  80  App.  Div.  (N.  Y.)  58.     Supra,  p.  29. 

1  Supra,  p.  27.  8  Supra,  p.  29.  9  Supra,  p.  30. 


LIABILITY   TO   STRANGERS  147 

tence  of  a  loan  to  himself; 1  for  he  cannot  change  himself 
from  a  trustee  of  the  funds  into  a  debtor  without  the  con- 
sent of  the  beneficiary  ; 2  and  the  fact  of  consent  must  be 
established  by  positive  proof.8 

If  a  defaulting  trustee  is  a  lawyer,  his  breach  of  trust  is 
a  cause  for  disbarment.4 

Liability  to  Beneficiaries.  — The  liabilities  of  trustees  to 
their  beneficiaries  are  joint  and  several,  and^a  decree  may 
be  enforced  against  either,  even  if  not  the  one  actually 
at  fault,  and  irrespective  of  liability  among  themselves  ; 5 
but  this  joint  liability  ends  with  the  trustee's  death,  and 
his  estate  is  liable  only  for  the  acts  during  the  trustee's 
lifetime. 

Each  transaction  stands  by  itself,  hence  the  gain  on  one 
cannot  set  off  the  loss  on  another.  All  the  gains  belong 
to  the  trust  estate,  and  not  to  the  trustee,  hence  they  do 
not  belong  to  him  to  set  against  his  liabilities ; 6  but  in 
administering  a  fund  as  a  whole,  one  transaction  cannot 
be  picked  apart  to  show  gains  and  losses,  as.  for  instance, 
in  developing  real  estate,  the  loss  on  a  building  built  to 
make  the  rest  more  readily  salable  is  part  of  the  whole 
transaction,  and  not  a  separate  loss.7 

The  trustee  is  liable  to  his  beneficiary  for  any  loss  of 
the  trust  property  arising  from  his  neglect  of  duty.  As, 
for  instance,  where  the  trust  is  created,  and  he  neglects 

1  Mass.  Kev.  Laws  (1902),  ch.  208,  §  48  ;  Rev.  Code  N.  Dak.  (1895), 
§  7464,  as  amended  by  Laws  1901,  ch.  82;   Bates's  Ann.  Stat.  Ohio 
(1906),   §6842-,  Annot.   Code   Oregon  (1902),  §  1836;  Code  Tenn. 
(1896),§  6592. 

2  Marshall  v.  Marshall,  53  Pac.  Rep.  617  (Col.  1898);  Gunter  ». 
Janes,  9  Cal.  643,  p.  659. 

8  In  re  Farmers'  Loan  &  Trust  Co.,  47  App.  Div.  (N.  Y.)  448. 
*  Thompson  v.  Finch,  8  DeG.,  M.  &  G.  560. 

&  McCartin  v.  Traphagen,  43  N.  J.  Eq.  323 ;  Bermingham  v.  Wil 
cox,  120  Cal.  467. 

6  Wiles  v.  Gresham,  2  Drew.  258 ;  Blake  v.  Pegram,  109  Mass.  54L 

7  Vyse  v.  Foster,  L.  R.  7  H.  L.  318. 


148  LIABILITY    TO    BENEFICIARIES 

to  collect  or  secure  the  property,1  or  inexcusably  allows 
rents  to  fall  in  arrears.2 

•  Thus,  if  he  neglects  to  insure  where  it  is  his  duty  to  do 
so,  he  will  be  liable  for  the  loss,8  or  if  he  neglects  to  invest, 
he  will  be  liable  for  interest.4 

He  is  liable  not  only  for  a  loss  directly  due  to  his 
neglect,  but  also  where  it  is  only  indirectly  due  to  his 
neglect ;  as,  for  instance,  if  he  leaves  the  property  im- 
properly in  the  hands  of  his  co-trustee  or  an  agent,  and  it 
is  misappropriated,  destroyed,  or  stolen.5  Though  he  will 
not  be  liable  for  the  acts  and  crimes  of  strangers  through 
which  the  property  is  lost,  if  he  has  done  his  duty  in 
taking  care  of  the  property,  as,  for  instance,  where  the 
property  is  properly  deposited  aiid  then  stolen,6  yet  if  he 
has  been  remiss  in  his  duty  he  will  be  liable  for  any  loss 
that  may  occur  in  any  manner ; 7  as,  for  instance,  if  he 
has  mingled  the  trust  money  with  his  own  funds  in 
the  bank,  he  will  be  liable  for  the  loss  by  the  failure 
of  the  bank ;  while  if  the  property  were  deposited  in  the 
names  of  the  trustees,  they  would  not  be  liable  unless  they 
were  careless  in  selecting  the  depositary.  The  usual  ex- 
emption clause  providing  that  the  trustee  shall  not  be 
liable  for  the  acts  or  defaults  of  his  agent  will  not  excuse 
him  if  he  neglects  his  duty  and  intrusts  matters  to  an 
agent  improperly.  The  exemption  clause  applies  only 
where  the  agent  is  acting  properly  as  such.8 

Liability  for  Co-trustee.  —  As  a  general  rule  he  is  liable 
for  his  own  acts  and  neglects  only,  and  is  not  liable  for 

1  Fen  wick  v.  Green  well,  10  Beav.  412.     Supra,  p.  100. 

2  Tebbs  v.  Carpenter,  1  Mad.  291 ;  In  re  Mclntyre,  24  App.  Div- 
(N.  Y.)  167. 

8  As  to  his  duty,  see  supra,  p.  102,  u.  3. 

4  See  supra,  p.  110.    White  v.  Ditson,  140  Mass.  351. 

5  Bostock  v.  Floyer,  L.  R.  1  Eq.  26.     Supra,  p.  103. 

6  Jones  v.  Lewis,  2  Ves.  Sen.  240. 

7  Civ.  Code  Cal.  (1903),  §  2236,  as  amended  by  Acts  of  1905,  ch, 
615;  Rev.  Civ.  Code  So.  Dak.  (1903),  §  1625. 

8  Wyman  ».  Patterson  (1900),  App.  Cas.  (Eng.)  271. 


LIABILITY   FOR   CO-TRUSTEE  149 

the  act  or  default  of  his  predecessor  in  the  trust,1  or  of 
his  co-trustee,2  unless  he  joins  in  the  breach  of  trust,  or 
negligently  permits  it ; 8  but  he  can  easily  make  himself 
so  by  giving  a  joint  bond,  which  he  need  never  do,  each 
trustee  having  a  right  to  give  his  separate  bond,4  or  join- 
ing in  a  fraudulent  account.6  He  will  be  liable  where  he 
has  handed  the  funds  to  his  co-trustee,  allowed  him  to  re- 
ceive them,  or  looked  on  at  a  breach  of  trust ; 6  as,  for  in- 
stance, by  joining  in  a  receipt  for  the  money  on  a  sale  of 
securities  and  afterwards  leaving  the  property  with  his 
co-trustee,7  though  in  that  case,  if  he  can  show  affirma- 
tively that  there  was  a  necessity  to  join  in  the  receipt  and 
leave  the  funds  in  the  hands  of  the  co-trustee  afterwards, 
he  will  escape  liability ; 8  or  by  neglecting  his  duty  and 
allowing  his  co-trustee  to  act  improperly  as  his  agent,9 
and  to  do  alone  what  ought  to  have  been  done  jointly ;  or 
by  standing  by  and  allowing  his  co-trustee  to  commit  a 
breach  of  trust.10  A  late  case  well  illustrates  these  rules. 
The  trustees  under  a  will  were  to  be  held  liable  for  their 
own  default  only.  The  active  management  of  the  estate 
was  intrusted  to  F.,  who  had  been  the  testator's  man  of 
affairs.  He  collected  and  embezzled  thirty  thousand  dol- 

1  Blake  v.  Pegram,  109  Mass.  541.    See  supra,  pp.  95,  101. 

2  Stowe  v.  Bowen,  99  Mass.  194 ;  Hinson  v.  Williamson,  74  Ala. 
180,  195  ;  Townley  v.  Sherburne,  3  White  &  Tudor,  L.  C.  Eq.,  6th  Am. 
ed.,  Notes,  964. 

8  Rev.  Civ.  Code  So.  Dak.  (1903),  §  1628j  Civ.  Code  Cal.  (1903), 
§  2239  ct  seq. 

*  Ames  v.  Armstrong,  106  Mass.  15. 

6  Horton  v.  Brocklehurst,  29  Beav.  504. 

6  Wilkins  v.  Hogg,  3  Gift.  116. 

7  It  is  to  be  noticed  that  the  ordinary  form  of  a  deed,  which  all  the 
trustees  must  sign,  contains  a  receipt  for  the  consideration. 

*  Monell  r.  Monell,  5  Johns.  Ch.  283. 

9  Rev.  Civ.  Code  So.  Dak.  (1903),  §  1628;  Cal.  Civ.  Code  (1903), 
§  2239 ;  Oliver  v.  Court,  8  Price,  127,  166.     Supra,  pp.  89,  90,  as  to 
collection  of  income. 

10  Crane  v.  Hearn,  25  N.  J.  Eq.  378.    See  supra,  pp.  89,  90,  for  distinc- 
tion between  leaving  income  and  principal  in  the  hands  of  one  trustee. 


150  LIABILITY   FOB    CO-TRUSTEE 

lars,  which  H. ,  the  inactive  trustee,  discovered  but  allowed 
F.  to  continue  to  manage  the  estate.  F.  then  embezzled 
thirteen  hundred  dollars.  The  inactive  trustee  was  not 
held  liable  for  the  first  embezzlement,  but  he  was  held 
liable  for  the  second.1 

So  also  the  trustee  will  be  liable  if  he  puts  or  unjustifi- 
ably leaves  the  trust  property  in  the  exclusive  control  of 
his  co- trustee  and  it  is  lost.2  He  may  not  rely  on  the 
representations  of  his  co-trustee  as  to  the  status  of  the 
property,  but  must  ascertain  it  himself.8 

Thus,  where  property  was  left  in  trust  to  the  widow 
and  brother  of  the  testator,  for  the  benefit  of  the  widow  for 
life  and  then  for  others,  and  the  widow  managed  the  trust 
and  the  brother  never  did  anything  about  it,  and  the 
widow  wasted  the  property  and  died  insolvent,  the  brother 
was  held  liable  for  the  whole  loss.4  So,  too,  where  the 
securities  were  deposited  with  a  banker  without  inspection 
for  four  years,  and  one  trustee  was  allowed  to  draw  them 
out.6  So,  too,  where  the  trustees  improperly  divide  the 
management  of  the  trust,  each  will  be  liable  for  the  other, 
as,  for  instance,  where  each  of  two  trustees  took  half  the 
property  and  invested  it  in  his  respective  business  and 
paid  interest  on  it,  and  then  one  failed,  the  other  was 
held  to  make  up  the  loss.6  So,  too,  if  he  joins  in  a 
fraudulent  or  unfair  account,7  or  in  a  receipt  for  money 
which  is  afterwards  misapplied. 

A  provision  in  the  trust  instrument  that  one  trustee 

1  In  re  Mallon's  Estate,  43  Misc.  Rep.  (N.  Y.)  569. 

2  Supra,  pp.  1 04, 1 05.    But  see  In  re  Westerfield,  32  App.  Div.  ( N. Y.) 
324,  where  trustee  who  was  excluded  from  management  was  not  held 
liable. 

8  Bates  v.  Underbill,  3  Redf.  (N.  Y.)  365 ;  In  re  Beatt/s  Estate, 
214  Pa.  St.  449. 

4  Clark  v.  Clark,  8  Paige,  153.  6  Supra,  p.  104. 

6  Graham  v.  Austin,  2  Gratt.  273.     It  is  not  necessary  to  exhaust 
the  remedy  against  the  defaulting  trustee   first.     Bermingbam  v. 
Wilcox,  120  Cal.  467. 

7  Blake  v.  Pegram,  109  Mass.  541. 


LIABILITY   FOR   CO-TRUSTEE  151 

shall  not  be  liable  for  the  acts  or  defaults  of  the  other 
does  not  relieve  him  of  liability  in  such  cases,  as  he  is 
made  liable,  not  because  the  other  is  at  fault,  but  because 
he  neglects  his  own  duties,  and  so  gives  the  co-trustee  the 
opportunity  to  waste  the  estate;  but  the  clause  may  be 
drawn  so  as  to  exempt  him,1  and  he  will  not  be  liable  if 
the  loss  occurred  by  following  out  the  directions  of  the 
trust  instrument,  as  for  instance  in  leaving  money  in 
the  hands  of  A,  where  the  instrument  says  he  may 
do  so.2 

A  trustee  who  has  made  good  a  loss  occasioned  by  a 
breach  of  trust  not  amounting  to  a  fraud,  is  entitled  to 
contribution  from  his  co-trustees ;  but  where  there  has 
been  a  joint  fraud  the  court  will  not  help  him  against 
his  partner  in  wrong.8 

A  trustee  who  has  been  guilty  of  no  fraud  himself,  but 
who  has  been  deceived  by  his  co-trustees  4  as  to  the  state 
of  the  funds,  or  who  has  made  good  a  loss  caused  by  his 
co-trustee's  fraud,  has  a  right  not  only  to  contribution 
but  to  full  indemnity  from  his  co-trustee,  who  has  had 
the  benefit  of  the  misappropriation.6  Or  he  may  recover 
indemnity  of  the  beneficiary  who  has  received  the  benefit 
of  a  breach  of  trust  induced  by  him.6 

Liability  for  Errors.  —  The  trustee  is  liable  for  any  loss 
caused  by  his  exceeding  his  powers;  as,  for  instance,  if 
he  sells  without  having  the  power  to  do  so,7  or  makes  an 

1  Wilkins  v.  Hogg,  3  Gift.  116;  White  &  Tudor,  L.  C.  Eq.,  6th  Am. 
ed.,  notetoBrice  v.  Stokes,  1029,  1030. 

2  Kilbee  v.  Sneyd,  2  Moll.  186,  200;  Pass  v.  Dondas,  29  W.  R.  332. 
«  Underbill,  p.  479. 

*  Thompson  v.  Finch,  8  DeG.,  M.  &  G.  560. 

6  Bahin  v.  Hughes,  31  Ch.  Div.  390;  McCartin  v.  Traphagen,  43 
N.  J.  Eq.  323  ;  Sherman  v.  Parish,  53  N.  Y.  483. 

6  Raby  v.  Ridehalgh,  7  DeG.,  M.  &  G.  104 ;  Griffith  v.  Hughes, 
3  Ch.  (1892),  105;  and  under  statutes  even  from  a  married  woman 
without  power  of  anticipation. 

7  Perrins  v.  Bellamy  (1899),  1  Ch.  797. 


152  LIABILITY   FOR    ERRORS 

unauthorized  conversion,  he  may  be  compelled  to  replace 
it  in  kind  or  make  good  its  increase  in  value.1 

Or  where  he  invests  in  securities  in  which  he  has  no 
power  to  invest,  even  though  honestly,  he  will  be  liable ; 
as,  for  instance,  where  the  trustee  was  authorized  to  in- 
vest in  real  security,  and  held  railroad  bonds  believing 
them  to  be  authorized,  he  was  held  liable.2 

So,  too,  he  is  liable  if  he  pays  the  wrong  person,8  as 
e.  g.  where  he  paid  a  sum  due  an  infant  to  his  father, 
without  order  of  court,  the  infant  could  demand  the  sum 
on  coming  of  age.4  Or  where  a  beneficiary  has  encum- 
bered his  estate,  and  there  is  notice  among  the  papers. 
Or  where,  under  a  misapprehension,  he  has  paid  sums 
which  should  be  principal  to  the  life  tenant,  or  vice 
versa. 

The  trustee  is  liable  for  his  errors  in  judgment  (unless 
expressly  exempted)  in  the  performance  of  his  duties,  but 
not  in  the  exercise  of  his  discretionary  powers.8 

The  trustee  is  held  to  perform  his  duties  with  reasonable 
discretion,6  that  is  to  say,  with  the  same  intelligence  that 
a  reasonable  man  would  use  in  the  transaction  of  his  own 
affairs  ;  the  fact  that  he  is  incompetent  is  no  excuse.  He 
must  be  at  the  pains  to  learn  his  duties.7  For  instance, 
it  being  the  duty  of  the  trustee  to  invest  the  trust  funds, 
if  he  invests  too  large  a  proportion  in  certain  securities, 
or  if  he  uses  poor  judgment  in  investing,  he  will  be  liable 
for  the  loss,  irrespective  of  his  honesty.  But  he  is  not 

1  Infra,  pp.  170,  171.  2  Robinson  v.  Robinson,  11  Beav.  371. 

8  See  Underbill,  p.  290;  see  as  to  distribution,  supra,  pp.  142-145. 

4  Dagley  v.  Tolferry,  1  P.  Wms.  285;  Simpson  on  Infants,  p.  180, 
2d  Eug.  ed. 

5  Supra,  pp.  59-63  ;  Civ.  Code  Cal.  (1903),  §  2238;  Rev.  Civ.  Code 
So.  Dak.  (1903),  §  1627  ;  Rev.  Code  N.  Dak.  (1895),  §  4274. 

6  "  Ordinary  care  and  diligence."     Rev.  Civ.  Code  So.  Dak.  (1903), 
§1637;  Code  Ga.  (1895),  §3170;  Cal.  Civ.  Code    (1903),  §§  2258, 
2259. 

7  Han  v.  Cary,  82  N.  Y.  65.    In  Pierce  v.  Prescott,  128  Mass.  140, 
a  guardian  was  held  liable  for  not  knowing  the  law  of  distributions. 
C.  J.  Gray  cites  many  other  cases  in  the  opinion. 


LIABILITY    FOR   ERRORS  153 

supposed  to  be  infallible,  and  where  he  has  acted  with 
that  amount  of  discretion  which  an  ordinarily  prudent 
man  uses  in  his  own  affairs,1  and  honestly,  he  will  be  pro- 
tected ;  and  even  where  he  has  acted  in  good  faith  only 
the  court  will  treat  him  leniently,  and  give  him  the  benefit 
of  the  doubt,2  especially  if  he  is  acting  under  advice  of 
counsel,3  since  this  fact  shows  that  he  used  due  diligence, 
though  it  is  not  in  itself  an  excuse.4 

This  liability  may  be  restricted  by  the  terms  of  the  trust 
instrument ;  and  a  clause  making  a  trustee  liable  for  his 
wilful  and  intentional  breaches  of  trust  only  is  a  com- 
mon provision  iu  trust  instruments,  and  will  be  given 
effect  by  the  courts.6  But  this  clause  does  not  excuse 
a  trustee  who  knowingly  or  carelessly  hazards  the  trust 
funds,  and  fails  in  his  duty  where  reasonable  inquiry 
would  have  made  him  safe.6 

He  cannot  set  off  the  gain  on  another  investment 
against  the  loss  on  any  injudicious  investment,  since 
all  gains  belong  to  the  trust  fund,  and  the  loss  on  an 
improper  investment  is  a  personal  liability,  and  the  fact 
that  the  trust  fund  has  largely  profited  by  the  good  man- 
agement of  the  trustee  does  not  affect  his  liability  to 
make  good  any  error  of  judgment.7 

But  if  he  have  a  discretionary  power  to  do  any  act,  the 
court  will  not  inquire  whether  he  has  used  good  judgment 
or  not,  provided  he  has  been  honest  in  its  exercise ;  as, 
for  instance,  if  he  have  a  power  of  sale,  the  court  will  not 
inquire  into  the  price  unless  it  be  so  grossly  inadequate 
as  to  suggest  a  fraud,  or  where  he  has  a  power  to  support, 

i  In  reCousins's  Estate,  111  Cal.  441.     Supra,  p.  116. 

3  Crabb  v.  Young,  92  N.  Y.  56. 

8  Perrine  v.  Vreeland,  33  N.  J.  Eq.  102. 

*  Stott  v.  Milne,  25  Ch.  D.  710;  Boulton  v.  Beard,  3  DeG.,  M.  &  G. 
608 ;  In  re  Westerfield,  32  App.  Div.  (N.  Y.)  324 ;  Perrins  v.  Bellamy 
(1899),  iCh.  797. 

6  Wilkins  v.  Hogg,  8  Jur.  (N.  S.)  25. 

6  Tattle  v.  Gilmore,  36  N.  J.  Eq.  617. 

7  Supra,  p.  147 ;  Wiles  v.  Gresham,  2  Drew.  258. 


154      LIABILITY  FOR  ERRORS  —  MEASURE  OF  DAMAGES 

the  discretion  of  the  trustee,  honestly  exercised,  as  to  the 
amount  of  support  will  be  final.1 

Measure  of  Damages.  —  A  trustee  who  has  caused  loss 
to  his  trust  must  make  the  fund  good,  and  will  be  charged 
with  interest  if  any  would  have  been  earned. 

Interest  is  simple  in  most  cases,2  but  compound  interest 
is  allowed  if  the  trust  was  for  accumulation,  or  if  the  funds 
have  been  used  in  trade,  as  that  amount  will  be  supposed 
to  be  realized,  or  as  a  punishment  for  disobeying  the  order 
of  the  court,  or  wilful  misconduct  in  the  management  of 
the  trust.8 

If  the  trustee  fails  to  perform  a  specified  duty,  as,  for 
instance,  to  invest  in  specified  stock,  the  beneficiary  may 
elect  to  have  the  money  and  interest,  or  an  equivalent 
amount  of  stock  and  the  dividends  declared  in  the 
meanwhile.4 

Similarly,  if  he  exceeds  his  powers  in  selling  real 
estate  or  stocks,  he  may  be  required  to  replace  them  by 
like  real  estate  or  stocks ; 5  and  if  he  sell  trust  stock  and 
have  shares  in  the  same  company  in  his  own  estate,  they 
can  be  held  by  the  beneficiary  as  against  his  assignee  in 
insolvency.6 

Where  a  trustee  had  sold  the  trust  property  and  appro- 
priated the  proceeds  to  his  own  use,  but  rendered  accounts 
as  though  he  still  held  the  securities,  he  was  charged  with 
the  market  value  of  the  securities  at  the  date  of  the  event, 
and  the  amount  of  dividends  payable  up  to  that  time,  but 
with  an  allowance  for  taxes  and  commissions,  since  the 

1  Supra,  p.  81. 

2  McKim  v.  Blake,  139  Mass.  593. 

3  Ames,  498,  n. ;  McKim  v.  Hibbard,  142  Mass.  422 ;  Jennison  v. 
Hapgood,  10  Pick.  77  ;  Bemmerly  v.  Woodward,  124  Cal.  568;  Kane 
v.  Kane's  Adm.,  146  Mo.  605  ;  St.  Paul  Trust  Co.  v.  Strong,  85  Minn.  1. 
Supra,  p.  110. 

*  Perry,  §  844 ;  Freeman  v.  Cook,  6  Ired.  Eq.  373 ;  Lewin,  p.  370. 
Infra,  pp.  170,  171. 

6  Supra,  pp.  151,  152.  e  Draper  v.  Stone,  71  Me.  175. 


MEASURE   OP   DAMAGES  —  LIABILITY   TERMINATED      155 

settlement  was  on  the  theory  that  the  account  was  made 
up  as  though  the  trust  had  been  properly  administered.1 
Had  the  stock  fallen  in  value,  the  beneficiary  might  have 
claimed  the  price  at  which  it  actually  sold  and  interest.2 
Io  the  absence  of  evidence  of  the  actual  price  received,  the 
trustee  is  chargeable  with  at  least  the  inventory  value.8 

If  a  trustee  buys  the  trust  property  at  a  sale,  he  must 
make  good  any  loss  in  price  incurred  at  reselling.4  Or  if 
he  sell  to  a  bona  fide  purchaser  before  the  sale  is  dis- 
affirmed, he  must  account  for  any  profit.5  And  if  the 
property  has  depreciated  in  value,  he  must  make  up  the 
difference  of  the  value  at  the  time  of  purchase,  with 
interest 

If  he  purchased  the  property  himself,  at  an  inadequate 
price,  the  court  may  confirm  the  sale,  requiring  him  to 
pay  the  difference  to  make  the  full  market  value.6 

If,  however,  the  trustee,  supposing  that  he  has  acquired 
a  good  title,  has  laid  out  money  in  good  faith,  and  im- 
proved the  estate,  he  will  be  allowed  for  it.7 

Liability  Terminated.  —  The  liability  of  the  trustee  may 
be  ended  by  his  passing  through  bankruptcy,8  or  getting 
a  release,9  settling  his  accounts,  or  by  the  statute  of 
limitations.10 

If  his  successor  in  the  trust  takes  over,  the  property 
without  objection  at  its  inventory  valuation,  and  retains 
it  for  a  considerable  time  unconverted,  he  cannot  subse- 

1  McKim  v.  Hibbard,  142  Mass.  422. 

2  Ibid.  427.  *  Ibid.  425. 
*  Davoue  v.  Fanning,  2  Johns.  Ch.  (N.  Y.)  252. 

6  Clark  i'.  Blackington,  110  Mass.  369. 
8  Morse  v.  Hill,  136  Mass.  60. 

7  Morse  v.  Hill,  136  Mass.  60;  also  Daroue  v.  Fanning,  2  Johns. 
Ch.  (N.  Y.)  252.     Supra,  p.  147. 

8  Thompson  v.  Finch,  8  DeG.,  M.  &  G.  560.    This  is  true  of  the 
United  States  Bankruptcy  Act,  but  not  of  the  Massachusetts  Insol- 
vency Act.    Tallant  v.  Stedman,  176  Mass.  460,  p.  466. 

»  Infra,  p.  176.  10  -Supra,  pp.  144,  145;  infra,  p.  178. 


156  LIABILITY    TERMINATED 

quently  charge  his  predecessor  with  any  loss.1  If,  how- 
ever, the  successor  seasonably  converts  the  property,  he 
may  claim  the  loss,  or  he  can  object  to  taking  the  property 
at  more  than  its  real  value.2 

He  is  not  liable  for  the  doings  in  the  trust  subsequent 
to  his  death,  but  an  action  against  him  for  a  breach  of 
trust  survives  in  equity.8 

The  ordinary  statute  limiting  the  time  for  the  collection 
of  a  debt  to  two  years  after  the  death  of  the  debtor  does 
not  apply  to  the  collection  of  trust  funds  from  the  estate 
of  a  trustee,  even  though  the  trustee  so  mingled  the  trust 
funds  with  his  own  that  they  cannot  be  traced,  for  he 
cannot  convert  himself  from  a  trustee  into  a  debtor  with- 
out the  beneficiaries'  consent,4  and  the  statute  is  against 
debtors  only.5 

1  Thayer  v.  Kinsey,  162  Mass.  232. 

2  In  re  Salmon,  42  Ch.  Div.  351  ;  Thayer  v.  Kinsey,  162  Mass.  232. 
»  Dodd  v.  Wilkinson,  41  N.  J.  Eq.  566. 

*  Supra,  pp.  146,  147. 

6  Gunter  v.  Janes,  9  Cal.  643,  p.  659  et  seq. 


PART  III. 

THE  BENEFICIARY. 

I.  Who  may  be  a  Beneficiary.  —  Almost  any  person 
may  be  a  beneficiary,  but  a  person  who  could  not  legally 
hold  property  within  the  jurisdiction  cannot  be  entitled  as 
a  beneficiary.  As,  for  instance,  a  slave,1  an  alien  enemy 
or  a  corporation2  that  could  not  hold  property  in  its  own 
name  in  the  jurisdiction,  could  not  hold  it  through  the 
instrumentality  of  a  trustee.8 

Parrots,  horses,  and  dogs,  and  in  former  times  slaves, 
might  be  the  objects  of  trusts,  but  they  could  not  be  true 
beneficiaries,  as  they  are  not  u  persons,"  and  therefore 
cannot  appear  in  court  to  enforce  the  trust.  Bequests  to 
unspecified  charities  stand  on  another  footing,  since  the 
Attorney  General  will  appear  to  enforce  them.4 

Trusts  for  "  things,"  such  as  pets,  etc.,  if  properly  drawn, 
will  not  be  interfered  with  by  the  court,  but  the  carrying 
of  them  out  must  depend  on  the  honor  of  the  trustee.  That 
is  to  say,  the  gift  may  be  to  a  trustee  to  expend  so  much 
as  he  thinks  fit  in  maintaining  certain  horses  and  dogs,  the 
residue  to  go  to  the  trustee.  A  further  clause  might  be 
added,  that,  if  the  trustee  failed  to  support  the  animals 
properly,  the  property  should  go  to  the  next  of  kin.  So, 
too,  the  direction  to  employ  a  particular  person  as  an  at- 

1  Pool  v.  Harrison,  18  Ala.  514. 

2  Coleman  v.  San  Rafael  Turnpike  Road  Co.,  49  Cal.  517. 

8  For  statutes  against  aliens  holding  land  in  sundry  States,  see 
Underbill,  p.  95,  n. 

*  But  see  Fosdick  v.  Town  of  Hempstead,  125  N.  Y.  581,  where  the 
poor  of  a  town  was  considered  too  indefinite. 


158  WHO   IS  THE   BENEFICIARY? 

torney  or  agent  by  a  testator  does  not  create  a  trust  or 
make  the  person  designated  a  beneficiary.1 

"Who  is  the  Beneficiary  ?  —  Any  person  who  has  a  claim 
against  the  trustee  for  any  of  the  benefit  of  the  trust  prop- 
erty is  a  beneficiary. 

The  claim  need  not  be  vested,  a  contingent  interest  being 
such  a  claim.2  • 

Persons  to  whom  income  is  payable  at  the  discretion 
of  the  trustee  are  not  beneficiaries  under  the  above  defini- 
tion, since  they  have  no  claim  they  can  enforce  or  assign, 
although  they  are  interested  in  the  trust  and  may  intervene 
to  have  a  proper  trustee.8 

In  the  absence  of  statute  ordering  the  appointment  of  a 
guardian  ad  litem,  persons  not  ascertained  or  not  in  being 
are  not  parties  interested.4 

Persons  having  a  mere  possibility,  or  a  person  to  whom 
a  beneficiary  has  given  an  order  on  the  trustee,  are  not 
beneficiaries,  although  they  have  property  that  may  be 
assigned.6  Nor  is  the  holder  of  a  general  power  of  ap- 
pointment a  beneficiary,  although,  in  some  jurisdictions,8 
if  he  exercise  the  power  his  creditors  will  take  the  estate. 

The  claim  of  the  beneficiary  is  not  to  any  part  of  the 
property  itself,  either  at  law  or  in  equity ;  hence  he  can- 
not sue  to  recover,  and  protect  the  fund  or  recover  damages 
for  an  injury  to  it.7  All  the  property  rights  are  in  the 
trustee,  and  the  claim  is  against  the  trustee  only.8 

II.  Estate  of  the  Beneficiary.  —  The  estate  of  the  bene- 
ficiary may  be  described  as  his  right  to  force  the  trustee 

1  Foster  v.  Elsley,  19  Ch.  Div.  518. 

8  Clarke  v.  Deveaux,  1  S.  C.  172. 

8  Wilson  v.  Wilson,  145  Mass.  490.  Supra,  pp.  22  and  81 ;  infra, 
p.  162. 

4  Bradstreet  v.  Bntterfield,  129  Mass.  "339;  Hartman's  Appeal,  90 
Pa.  St.  203  ;  Dexter  v.  Cotting,  149  Mass.  92. 

6  Hawley  v.  Ross,  7  Paige,  103.  G  Infra,  p.  162. 

7  Western  Railroad  Co.  v.  Nolan,  48  N.  Y.  513.     Statutes  in  Code 
States  and  several  others.  8  Supra,  p.  26. 


ESTATE  OP  THE  BENEFICIARY  159 

to  carry  out  the  terms  of  the  trust.1  As  courts  of 
equity  recognize  the  beneficiary's  absolute  right  in  this 
respect,  they  regard  him  as  the  true  owner  of  the  property, 
and  have  invested  his  equitable  estate  with  many  of  the 
same  incidents  and  qualities  pertaining  to  legal  ownership 
in  a  court  of  law.2 

As  has  been  hereinbefore  pointed  out,8  the  beneficiary 
is  not  clothed  with  the  privileges  and  burdens  incidental 
to  the  ownership  of  the  property,  which  are  attributes  of 
the  legal  estate  and  consequently  belong  to  the  trustee ; 
but  his  equitable  estate  is  property,  and  he  may  treat  it  in 
general  much  as  the  legal  owner  of  property  may  treat 
his,  although  it  is  not  such  an  ownership  of  things  as 
would,  for  instance,  qualify  a  voter  where  a  property 
qualification  is  required.4 

Incidents  of  the  Equitable  Estate.  —  The  estate  of  the 
beneficiaries  is  not  joint,  even  though  there  be  several 
beneficiaries  entitled  to  equal  and  similar  interests  in 
the  trust.6  Each  beneficiary  may  act  independently  of 
the  others,  and  the  admissions  of  one  will  not  estop  the 
others.6  A  majority  has  no  greater  right  than  a  minor- 
ity, or  than  even  an  individual. 

Where,  however,  there  has  been  a  breach  of  trust  in 
the  sale  of  trust  property,  and  the  beneficiaries  do  not 
agree  in  desiring  a  reconveyance,  if  their  interests  cannot 
be  separated  the  court  will  proceed  in  the  best  interests  of 
all  the  beneficiaries  and  order  an  avoidance  for  all,  or 
damages  for  all,  as  it  thinks  best.7 

Or   where  an  account  is  corrected  at  the  instance  of 

1  If  a  valid  trust  is  established  the  court  will  enforce  it  even  though 
the  testator  provides  that  the  trustee  shall  not  be  interfered  with  by  the 
court.  Keeler  v.  Lauer,  85  Pac.  R.  541  (Kansas,  1906).  Supra,  p.  62. 

3  Freedman's  Co.  v.  Earle,  110  U.  S.  710. 
8  Supra,  p.  26  ;  and  see  Lewiu,  p.  640. 

4  Lewin,  p.  247;  Burgess  K.  Wheate,  1  Eden,  177,  251. 

»  Underbill,  p.  34.  •  Levi  v.  Gardner,  53  S.  C.  24. 

7  Morse  v.  Hill,  136  Mass.  60. 


160          INCIDENTS   OP  THE   EQUITABLE   ESTATE 

one,  all  will  be  entitled  to  participate  in  the  benefit  of 
the  correction.1 

The  equitable  estate  may  descend  or  be  devised,  and  is 
now  usually  liable  to  the  incidents  of  curtesy  and  dower.2 

That  curtesy  may  attach,  the  estate  must  be  in  possession, 
when  it  will  attach  although  limited  to  the  wife's  heirs.8 

In  early  times  dower  was  not  an  incident  of  a  trust 
estate,4  but  now,  by  statute,  it  usually  is,5  although  there 
are  some  jurisdictions  where  there  is  no  dower,  as  Massa- 
chusetts and  Maine,  but  the  wife  is  compensated  in  other 
ways.6 

Beneficial  estates  in  lands  have  been  held  not  liable 
to  forfeiture  or  escheat,7  but  under  the  statutes  in  the 
United  States  on  failure  of  heirs  the  trust  property,  whether 
real  or  personal,  would  pass  to  the  State.8 

The  beneficial  estate  is  subject  to  disseisin  where  a 
trustee  repudiates  the  trust,  and  claims  the  property  so 
that  the  statute  of  limitations  begins  to  run.9 

Alienation. — In  the  absence  of  restraint  by  the  terms 
of  the  settlement  or  statute,  the  beneficial  estate  may  be 
alienated  as  freely  as  any  other  property.10 

The  beneficiary  may  convey  it  away  and  it  will  pass  to 

1  Little  v.  Little,  161  Mass.  189.     Even  where  they  have  assented  to 
the  account,  Bennett  v.  Pierce,  188  Mass.  186,  unless  the  breach  of 
trust  has  been  knowingly  released.    Vohmann  v.  Michel,  185  N.  Y.  420. 
Supra,  p.  94. 

2  Code  Miss.  (1906),  §  1652;  Laws  of  Del.  (1893),  ch.  85,  §  1 ;  Rev. 
Stat.  N.  Y.  (1901),  p.  3078,  §  280;  Bartlett  v.  Bartlett,  137  Mass.  156; 
Perry,  §  323. 

8  Tillinghast  v.  Coggeshall,  7  R.  I.  383. 

*  Reed  v.  Whitney,  7  Gray,  533.  6  See  Stimpson,  §  3202. 

6  Hamlin  v.  Hamlin,  19  Me.  141  ;  Reed  v.  Whitney,  7  Gray,  533 ; 
Simonds  v.  Simonds,  112  Mass.  164. 

7  Burgess  v.  Wheate,  1  W.  Bl.  123. 

8  Perry,  §§  327,  436.  »  Infra,  p.  178. 

10  In  Ga.  Code  (1895),  §  3188,  may  sell  to  any  person  except  hus- 
band and  trustee.  In  Pennsylvania  and  South  Carolina,  a  married 
woman  can  convey  only  in  the  manner  provided  in  the  settlement, 
Quin's  Estate,  144  Pa.  444;  Dunn  v.  Dunn,  1  S.  C.  350;  Gray, 
Restraints  on  Alienation,  2d  ed.,  §  275  b. 


ALIENATION  —  WHAT   ESTATE    PASSES  161 

his  assignee  under  a  general  assignment.1  He  may  dis- 
pose of  it  by  will,  and  it  may  be  taken  by  his  creditors  for 
his  debts,  the  manner  in  which  it  is  reached  varying 
according  to  local  law ;  2  but  there  is  some  way  of  reach- 
ing it  everywhere. 

Alienation,  What  Estate  passes.  —  The  beneficiary,  un- 
like the  owner,  has  no  property  to  alien.  All  he  has  are 
his  rights,  or,  as  they  are  called,  his  equity.8 

This  equity  or  claim  against  the  trustee  is  subject  to  all 
the  counter  claims  of  the  trustees. 

Thus,  if  the  beneficiary  was  indebted  to  the  trustee,  his 
equity  will  pass  to  his  transferee  subject  to  the  trustee's 
counter  claim,  but  not  if  it  be  in  autre  droit.4  Or  if  the 
beneficiary,  being  also  a  defaulting  trustee,  assigns,  his 
assignee  will  take  subject  to  making  good  the  default.5 

It  follows  from  the  nature  of  the  estate,  being  a  claim 
instead  of  property,  that  the  assignor  can  only  transfer 
what  rights  he  has,  and  the  assignees  accordingly  take  in 
the  order  of  their  assignments,  and  a  purchaser  for  value 
gets  no  better  title  than  a  volunteer.6  A  trustee  could 
give  his  own  claim  priority  over  an  assignee,7  and  if  a 
later  assignee  acting  in  good  faith  fortifies  his  equity  by 
a  legal  right,  such  as  payment  of  the  claim,8  a  judgment,9 
or  a  new  obligation  from  the  trustee  to  him  direct,  he  may 
hold  the  property  both  in  law  and  equity.10 

1  Forbes  v.  Lothrop,  137  Mass.  523. 

2  Gray,  Restraints  on  Alienation,  2d  ed.,  §§  170-174.    On  execu- 
tion, Hadden  v.  Spader,  20  Johns.  554.     By  creditor's  bill  for  equitable 
execution,  Drake  v.  Rice,  130  Mass.  410;  Chase  ».  Searls,  45  N.  H.  51 1. 

8  Thus  he  cannot  have  his  assignment  of  his  interest  noted  against 
a  trust  mortgage  in  the  registry  of  deeds,  as  it  might  cloud  the  legal 
title  of  the  trustee.  Cheyney  v.  Geary,  194  Pa.  St.  427. 

*  Supra,  p.  49.    Infra,  p.  184.       6  Belknap  v.  Belknap,  5  Allen,  468. 

8  Philips  v.  Philips,  4  DeG.,  F.  &  J.  208. 

7  Furniss  v.  Leupp,  67  N.  J.  Eq.  159. 

8  N.  Y.,  N.  H.  &  H.  R.  R.  Co.  v.  Schuyler,  34  N.  Y.  30;  Bridge  tx 
Conn.  Life  Ins.  Co.,  152  Mass.  343. 

9  Judaon  v.  Corcoran,  17  How.  612.  10  Ames,  328. 

11 


162  ALIENATION,  WHAT  ESTATE   PASSES 

In  all  jurisdictions  the  assignment  of  an  equity  in  real 
estate  is  complete  when  assignor  and  assignee  have 
assented ; l  and  the  same  rule  is  true  of  personal  property 
in  Massachusetts,  New  York,  Minnesota,  Indiana,  and 
West  Virginia,2  but  in  other  jurisdictions  notice  to  the 
trustee  is  necessary  to  complete  the  assignment  of  an 
equity  in  personal  property.8 

Notice  to  be  good  must  be  given  to  the  trustee  after  his 
appointment,4  and  notice  to  one  of  several  trustees  or 
other  joint  obligors  is  notice  to  all.8 

Knowledge  is  notice,  if  obtained  in  such  a  manner  as 
would  affect  a  reasonable  man ; 6  but  if  the  assignor  is 
the  trustee  his  knowledge  is  not  notice,  but  if  he  be 
assignee  knowledge  is  notice.7 

Accordingly,  in  those  jurisdictions  where  notice  is  neces- 
sary to  complete  the  transaction,  the  person  giving  notice 
first  will  have  priority ;  but  if  the  person  giving  the  notice 
was  aware  of  the  previous  assignment,  his  notice  will  not 
help  him. 

A  person  who  has  a  general  power  of  appointment  and 
exercises  it,  in  Massachusetts,8  makes  the  property  assets 
of  his  estate  for  creditors,  since  he  should  have  appointed 
to  them  instead  of  to  volunteers,  but  in  some  other  States 
the  property  is  held  to  pass  directly  to  the  appointee  under 
a  general  power  in  the  same  way  as  if  the  power  were 
special.9  If  the  power  of  appointment  be  special,  the 

l  Lee  v.  Howlett,  2  K.  &  J.  531. 

a  Thayer  v.  Daniels,  113  Mass.  129;  White  v.  Wiley,  14  Ind.  496  ; 
McDonald  v.  Kneeland,  5  Minn.  352  ;  Clarke  v.  Hogeman,  13  W.  Va. 
718;  Fairbanks  v.  Sargent,  104  N.  Y.  108. 

8  Foster   v.  Cockrell,   3  Cl.  &  Fin.  456 ;    Wallston  v.  Braswell, 
1  Jones  Eq.  137  ;  Copeland  v.  Manton,  22  Ohio  St.  398. 

*  Roxburghe  v.  Cox,  17  Ch.  D.  520,  527. 
6  Perry,  §  438,  end. 

6  Seger  v.  Farmers'  Loan  &  Trust  Co.,  73  App.  Div.   (N.  Y.)  293. 

7  Ames,  328,  n. ;  Lloyd  v.  Banks,  3  Ch.  488. 
•  8  Clapp  v.  Ingraham,  126  Mass.  200. 

9  Humphrey  v.  Cambell,  59  S.  C.  39 ;  In  re  Dunglison's  Estate, 
201  Pa.  St.  592. 


ALIENATION,  WHAT   ESTATE  PASSES  163 

creditors  could  not  take  unless  the  settlor  and  the  donee 
of  the  power  were  the  same,1  in  which  case  quaere?*  But 
a  person  to  whom  income  is  payable  at  the  pleasure  of 
the  trustee  has  no  estate  that  can  be  assigned  or  taken 
for  his  debts,  as  his  assignees  or  creditors  must  take 
through  him  and  he  has  no  rights  that  he  can  enforce.* 
In  some  States  the  creditors  have  lien  by  statute  even 
where  the  power  is  not  exercised.4 

Restraint  on  Alienation.  —  One  of  the  ordinary  motives 
for  giving  property  in  trust,  instead  of  giving  it  outright, 
is  the  desire  of  donors  to  secure  to  the  beneficiaries  the 
enjoyment  of  its  benefits  irrespective  of  their  improvidence 
or  extravagance. 

In  such  cases  it  is  usual  to  insert  a  limitation  in  the  trust 
instrument  that  the  beneficiary  shall  not  take  his  income 
by  way  of  anticipation,  and  that  it  and  the  principal  shall 
not  be  assigned,  or  be  liable  to  be  taken  for  his  debts.6 

As  a  general  rule  in  America,  such  a  restraint  on  the 
alienation  of  the  income  is  valid,  but  is  invalid  as  regards 
the  principal  fund,6  while  in  England  and  in  other  States 
(there  being  several  where  the  question  is  not  determined) 
such  a  restriction  is  inoperative  except  in  the  case  of  a 

1  Bailey  v.  Lloyd,  5  Russ.  330  ;  Cowx  v.  Foster,  1  Johns.  &  Hem.  30. 

2  The  policy  of  the  law  is  well  set  forth  by  Morton,  C.  J.,  in  Pa- 
cific Bank  v.  Windram,  133  Mass.  175-177.    There  is  a  lack  of  direct 
decisions. 

8  Infra,  p.  166. 

4  The  assignee's  standing  in  the  Probate  Court  is  a  matter  of  some 
doubt,  but  the  allowance  of  an  account  showing  a  payment  to  an  as- 
signee necessarily  involves  the  determination  of  the  validity  of  the 
assignment.     Palmer  v.  Whitney,  166  Mass.  306,  p.  310.     And  heirs 
who  have  assigned  all  their  interest  have  no  right  to  call  the  trustee  to 
account.   Stevens  v.  Palmer,  15  Gray,  505.     When  a  decree  of  distri- 
bution has  been    ordered,   the   assignees   may  compel  payment   to 
themselves  in  equity.     Lenz  v.  Prescott,  144  Mass.  505. 

5  See  supra,  p.  80.    The  decisions  on  this  subject,  and  the  policy  in- 
volved, are  thoroughly  discussed  in  Restraints  on  the  Alienation  of 
Property,  by  John  Chipman  Gray,  LL.D.,  2d  ed.,  1895. 

6  Gray,  Restraints  on  Alienation,  2d  ed.,  §  167  j. 


164  BESTRAINT   ON   ALIENATION 

beneficiary  who  is  a  married  woman,1  who  is  excepted 
everywhere  except  in  Massachusetts,  Pennsylvania,  and 
Maryland,  where  she  cannot  settle  property  on  herself 
without  power  of  alienation  during  coverture.2 

This  restraint  in  the  case  of  a  married  woman  cannot 
be  removed  by  any  one,  not  even  by  the  court,8  and  can- 
not be  set  aside  to  relieve  against  her  fraud  or  breach  of 
trust,4  nor  will  acquiescence  by  the  married  woman  excuse 
a  trustee  for  disregarding  it.5 

In  most  States  the  restraint  on  alienation  can  be  made 
only  by  the  terms  of  the  trust  instrument.  There  are 
some  States,6  notably  those  having  codes,  where  such 
restraint  is  provided  for  by  statute. 

In  Pennsylvania,7  Massachusetts,8  Illinois,9  Maine,10 
Maryland,11  Mississippi,12  Missouri,13  Texas,14  West  Vir- 
ginia,15 and  probably  Tennessee,16  Delaware,17  Indiana,18 


1  Gray,  Restraints  on  Alienation,  2d  ed.,  §§  134-213, 268,  2686. 

2  Ibid.,  §§  269-277  a.    See  note  to  Underbill,  p.  377 ;  Pacific  Bank 
v.  Windram,  133  Mass.  175 ;  Jackson  v.  Von  Zedlitz,   136  Mass.  342; 
Brown  v.  Macgill,  87  Md.  161. 

3  Robinson  v.  Wheelwright,  21  Beav.  214. 
*  Stanley  v.  Stanley,  7  Ch.  D.  589. 

6  Gray,  Restraints  on  Alienation,  2d  ed.,  §  271 ;  Fletcher  v.  Greene, 
33  Beav.  426. 

6  Civ.  Code  Cal.  (1903),  §  867  ;  N.  Dak.  Civ.  Code  (1895),  §  3398. 

7  Overman's  Appeal,  88  Pa.  276. 

8  Broadway  Bank  v.  Adams,  133  Mass.  170;  Nickerson  v.  Van 
Horn,  181  Mass.  562. 

»  Steib  v.  Whitehead,  111  111.  247. 
10  Roberts  v.  Stevens,  84  Me.  325. 

u  Smith  v.  Towers,  69  Md.  77  ;  Brown  v.  Macgill,  87  Md.  161 ;  Jack- 
son Sq.  Loan  &  Savings  Ass'n  v.  Bartlett,  95  Md.  661. 

12  Leigh  v.  Harrison,  69  Miss.  923. 

13  Lampert  v.  Haydel,  20  Mo.  App.  616. 

14  Monday  v.  Vance,  92  Tex.  428. 

,    15  Guernsey  v.  Lazear,  51  W.  Va.  328. 

w  Tenn.  Code  (1896),  §§6091-6093;  Jourolman  v.  Massengill,  86 
Tenn.  81. 

17  Gray  v.  Corbit,  4  Del.  Ch.  135. 

18  Thompson  v.  Murphy,  10  Ind.  App.  464. 


RESTRAINT    ON   ALIENATION  165 

and  in  the  Federal  courts1  and  Vermont,2  the  settlor 
may  settle  the  life  estate  without  power  of  alienation  on 
any  one  but  himself  as  beneficiary,  and  it  cannot  be  taken 
for  his  debts.8  The  provision  need  not  specify  that  the 
income  may  be  accumulated,  it  is  only  necessary  to  have 
a  clear  intention  expressed  by  the  settlor  that  the  income 
cannot  be  controlled  by  the  beneficiary  until  it  comes  into 
his  actual  possession.4  Such  restraints  are  adjudged 
bad5  in  Rhode  Island,8  New  York  (aside  from  statute7), 
North  Carolina,8  South  Carolina,9  Georgia,10  Alabama,11 
Ohio,12  Kentucky,13  Virginia,14  and  probably  in  Arkansas ; 16 
in  Connecticut  the  dicta  are  conflicting,  and  there  are  no 
decisions.16 

Under  the  statutory  provisions  of  New  York,17  New 
Jersey,  Indiana,  Michigan,  Wisconsin,  Minnesota,  Kansas, 
California,  and  North  and  South  Dakota,  the  beneficiary 
may  be  restrained  from  alienating  the  rents  and  profits, 
but  not  the  gross  sum.18 

1  Nichols  v.  Eaton,  91  U.  S.  716.       2  Barnes  v.  Dow,  59  Vt.  530. 
8  Gray,  Restraints  on  Alienation,  2d  ed.,  §§  177  a,  240  A  to  249  b; 
also  p.  281. 

*  Nickersou  v.  Van  Horn,  181  Mass.  562. 

5  Gray,  Restraints  on  Alienation,  2d  ed.,  §  178. 

8  Tillinghast  v.  Bradford,  5  R.  I.  205. 

7  Rome  Exch.  Bk.  v.  Eames,  4  Abb.  Ct.  App.  83,  but  changed  by 
statute.     See  note  1 8,  infra.     In  voluntary  settlement  on  self  income 
can  be  reached  by  creditor  in  spite  of  statute.     Schenck  v.  Barnes,  156 
N.  Y.  316. 

8  Pace  v.  Pace,  73  N.  C.  119. 

9  Heath  v.  Bishop,  4  Rich.  Eq.  46. 

10  Bailie  v.  McWhorter,   56  Ga.  183;  Ga.  Civ.  Code  (1895),  §  3149. 

11  Robertson  v.  Johnston,  36  Ala.  197. 

12  Hobbs  v.  Smith,  15  Ohio  St.  419. 
w  Kuefler  v.  Shreve,  78  Ky.  297. 

w  Restraint  was  allowed  in  Garland  v.  Garland,  87  Va.  758,  but 
disallowed  in  Hutchinson  v.  Maxwell,  100  Va.  169;  Honaker  Sons  v. 
Duff,  101  Va.  675. 

15  Lindsay  v.  Harrison,  8  Ark.  302. 

16  Gray,  Restraints  on  Alienation,  2d  ed.,  §  195. 

17  Cochrane  v.  Schell,  140  N.  Y.  516.     See  note  7,  supra.    . 

18  Rev.  Stat.  N.  Y.  (1901),  p.  3027,  §  83,  aa  amended  by  Laws  of 


166  RESTRAINT    ON   ALIENATION 

In  Arizona 1  he  may  settle  on  his  children  without  power 
of  alienation,  and  in  North  Carolina2  it  may  be  so  settled 
on  a  relative,  if  at  the  creation  of  the  trust  his  debts  do 
not  exceed  five  hundred  dollars. 

Although  there  are  jurisdictions,  as  appears  above, 
where  a  restraint  on  alienation  cannot  be  successfully 
attached  to  a  settlement  where  the  gift  to  the  beneficiary 
is  unlimited,  yet  the  same  result  is  practically  reached  by 
what  is  commonly  known  as  a  spendthrift  trust ;  that  is 
to  say,  by  leaving  it  to  the  pleasure  of  the  trustees  whether 
they  will  use  the  trust  fund  for  the  beneficiary,8  or  as 
more  commonly  provided,  pay  the  income  to  the  benefi- 
ciary, use  a  part  of  it  for  his  support,  or  accumulate  so 
much  as  the}-  think  fit.  Where  it  is  so  provided  by  the 
settlement,  the  creditors  of  the  beneficiary  cannot  take  the 
income,  because  the  beneficiary  has  no  right  to  any  specific 
income  which  he  can  enforce,4  and  therefore  nothing  that 
he  can  alien,  or  that  can  be  taken  for  his  debts ;  but  in 
such  cases,  if  the  beneficiary  is  also  trustee,  the  estate 
vests  in  him  absolute!}',  and  no  spendthrift  trust  is  estab- 
lished.5 In  England,  and  in  those  States  following  the 
English  rule,  the  trustee  must  account  to  the  creditor  for 
any  income  which  he  pays  to  or  expends  for  the  beneficiary 
after  notice  of  his  assignment,6  although  if  he  pays  or 
expends  it  for  members  of  the  family  or  other  persons 

1903,  ch.  88  ;  N.  J.  Gen.  Stat.  (1895),  vol.  1,  p.  390,  §  91  ;  Comp.  Laws 
Mich.  (1897),  §  8847  ;  Rev.  Laws  Minn. (1 905),  §  3257  ;  R«v.  Code  N.  D. 
(1895),  §  3398;  Gen.  Stat.  Kan.  (1897),  ch.  113,  §4;  Civ.  Code  Cal. 
(1903),  §§  857,  859,  867 ;  Rev.  Civ.  Code  So.  Dak.  (1903),  §§  305,307, 
315;  Wis.  Stat.  (1898),  §2089;  Burns's  Annot.  Ind.  Stat.  (1901), 
§  3394  ;  Gray,  §  296. 

1  Rev.  Stat.  Ariz.  (1901),  §  4232. 

2  N.  C.  Rev.  Code  (1905),  §  1588. 

8  Huntington  v.  Jones,  72  Conn.  45. 

4  In  re  Bullock ;  Good  v.  Lickorish,  60  L.  J.  Ch.  341  ;  Nickerson 
r.Van  Horn,  181  Mass.  562. 

5  Hahn  v.  Hutchinson,  159  Pa.  St.  13a 

6  Gray,  Restraints  on  Alienation,  2d  ed.,  §  167$r;  Re  Coleman,  39 
Ch.  D.  443. 


RESTRAINT   ON    ALIENATION  167 

specified  by  the  settlement  the  creditor  lias  no  claim.  In 
jurisdictions  not  allowing  restraints  on  alienation,  if  the 
provision  be  to  pay  all  the  income  to  him  or  apply  it  all 
to  his  support,  he  has  an  absolute  right  which  he  can  alien 
or  which  can  be  taken,  in  spite  of  a  provision  to  the 
contrary. 

If  the  provision  be  to  pay  him  or  support  his  familj7,  in 
most  jurisdictions  none  of  the  income  can  be  taken,1 
but  in  others,  notably  where  the  matter  is  regulated  by 
statute,  so  much  as  is  left  after  reasonable  support  may 
be  taken  or  alienated,2  and  this  amount  is  sometimes  fixed 
by  the  statute  ;  but  the  statutes  only  protect  the  creditor, 
and  give  no  power  of  voluntary  alienation  to  the  benefi- 
ciary.8 A  provision  for  the  support  of  a  beneficiary  does 
not  cover  the  support  of  his  wife  and  family  living  apart, 
and  for  whom  he  fails  to  provide.  They  are  like  other 
creditors.4 

The  settlor  may  attach  a  condition  to  the  gift  of  income, 
that  if  it  be  alienated,  or  if  the  beneficiary  become  bank- 
rupt, the  income  shall  pass  to  others,5  and  this  condition 
will  be  valid  in  any  case,  even  though  the  person  to  whom 
the  income  passes  is  the  wife  of  the  original  beneficiary,8 
except  only  where  the  income  is  settled  on  the  settlor  him- 
self;7 but  this  exception  does  not  apply  to  a  married 

1  Seymour  v.  McAvoy,  121  Cal.  438.     A  court  of  equity  cannot  de- 
termine how  much  income  is  required  for  support  of  beneficiary  and 
family,  therefore  there  is  no  surplus  for  a  creditor.    First  National 
Bank  v.  Mortimer,  28  Misc.  (N.  Y.)  686. 

2  For  the  statutes,  see  Stimpson,  Statute  Law,  p.  237  ;  Gray,  Re- 
straints on  Alienation,  2d  ed.,  §  296.     Supra, -p.  165,  note  18. 

3  Gray,  Restraints  on  Alienation,  2d  ed.,  §292;  Ames,  401,  n. ; 
Tollesw.  Wood,  99  N.  Y.  616;   Sherman  v.  Skuse,  166  N.  Y.  345; 
Furniss  v.  Lcupp,  67  N.  J.  Eq.  159 ;  but  in  Illinois  the  statute  curiously 
cuts  out  the  creditor,  and  allows  the  beneficiary  to  alienate ;  Potter  v. 
Couch,  141  U.  S.  296. 

*  Board  of  Charities  v.  Lockhard,  198  Pa.  St.  572. 

*  Re  Levy's  Trust,  30  Ch.  D.  119 ;  Nichols  v.  Eaton,  91  U.  S.  716. 

*  Samuel  v.  Samuel,  12  Ch.  D.  152;  Gray,  Restraints  on  Aliena- 
tion, 2d  ed.,  §  46. 

7  Jackson  v.  Von  Zedlitz,  136  Mass.  342. 


168  RESTRAINT    ON   ALIENATION 

woman  under  coverture,1  except  in  Pennsylvania,  Mary- 
land, and  Massachusetts,  where  married  women  have  the 
same  status  as  other  individuals.2 

A  similar  condition  attached  to  a  gift  of  the  principal  of 
the  fund  is  valid  so  long  as  the  estate  remains  contingent, 
but  if  the  estate  vests,  then  the  gift  over  becomes  void.8 
A  trustee  having  discretion  to  spend  part  of  the  principal 
for  the  beneficiary  need  not  pay  his  debts,4  but  where 
the  life  tenant  might  call  for  the  principal  if  he  needed 
it  in  his  business,  his  creditors  could  take  it.  It  was  his 
duty  to  call  for  it.6 

A  provision  attached  to  a  gift  that  so  much  as  shall  not 
be  used  or  alienated  shall  go  to  another  is  void.8 

A  limitation  of  the  income  to  the  sole  and  separate  use 
of  a  married  woman  is  not  a  restraint  on  alienation.7 

III.  Rights  against  Trustee.  —  As  the  whole  estate  of 
the  beneficiary  consists  of  his  right  to  compel  the  trustee 
to  carry  out  the  trust,  he  is  considered  to  be  peculiarly 
under  the  care  of  the  court. 

Where  enforced.  —  The  beneficiary  may  have  a  sub- 
poena against  the  trustee  wherever  he  can  find  him,8  irre- 
spective of  the  situation  of  the  trust  property,9  unless  the 
trust  be  created  by  the  decree  of  a  court  of  another  State, 
in  which  case  the  trustee  can  only  be  sued  there,  unless 
ancillary  trusteeship  be  also  taken  out  in  the  jurisdiction 
where  suit  is  brought.10  And  where  the  trust  is  established 
by  the  decree  of  a  court  of  one  State,  the  courts  of  that 

1  Clive  v.  Carew,  1  Johns.  &  Hem.  199.       2  See  supra,  pp.  163, 164. 

8  Mandlebaam  v.  McDonell,  29  Mich.  78. 

*  Huntington  v.  Jones,  72  Conn.  45. 

6  Ullman  v.  Cameron,  105  App.  Div.  (N.  Y.)  159. 

6  Foster  v.  Smith,  156  Mass.  379;  Fisher  v.  Wister,  154  Pa.  St.  65; 
Gray,  Restraints  on  Alienation,  2d  ed.,  §§  57-74. 

7  Forbes  v.  Lothrop,  137  Mass.  523. 

8  Brown  v.  Desmond,  100  Mass.  267  ;  Kildare  v.  Eustace,  1  Vernon, 
405  ;  Cooley  v.  Scarlett,  38  111.  316. 

9  Massie  v.  Watts,  6  Crane h,  148,  160,  Marshall,  C.  J. 
10  Jenkins  v.  Lester,  131  Mass.  355.    7n/ro,.p.  189. 


RIGHTS   AGAINST   TRUSTEES  —  WHERE   ENFORCED      169 

State  have  jurisdiction  to  regulate  the  trust,  although  both 
the  trustee  and  beneficiary  are  out  of  the  jurisdiction,  since 
they  can  remove  the  trustee  and  appoint  one  to  act  in  his 
place.1  So  also,  if  the  trustee  is  not  within  the  jurisdic- 
tion, but  the  trust  property  is  within  the  jurisdiction  of 
the  court,  and  there  is  a  statute  vesting  the  property  in  a 
trustee  appointed  by  the  court,2  then  the  court  can  appoint 
a  trustee  to  execute  the  trusts.  If,  however,  there  is  no 
statute  to  transfer  the  title  to  the  property,  the  court  is 
powerless,  unless  it  have  jurisdiction  over  the  trustee  in 
whom  the  title  is  vested.8 

If  the  trust  is  illegal  in  the  jurisdiction  where  it  is 
sought  to  be  enforced,  the  trustees  will  hold  the  property 
on  a  resulting  trust  for  the  heirs.4 

The  beneficiary  is  entitled  to  have  proper  persons  and  a 
proper  number  of  trustees,  and  any  person  interested  in 
the  trust,  even  though  the  interest  is  contingent  on  the 
mere  possibility  of  receiving  a  payment  at  the  discretion 
of  the  trustee,  may  apply  to  the  court  in  the  matter  of 
removing  or  appointing  a  trustee.6 

Can  Compel  What.  —  The  beneficiary  can  compel  the 
trustee  to  perform  his  duties,  and  if  the  trustee  refuses  to 
sue  or  defend,  the  beneficiary  may  sue  or  defend  in  the 
trustee's  name  by  getting  leave  of  court  to  do  so ; 6  but 
the  trustee  must  be  shown  to  be  in  default,7  and  indemni- 
fied for  costs.8 

1  Chase  v.  Chase,  2  Allen,  101 ;  Curtis  v.  Smith,  6  Blatchf.  537. 

2  Felch  v.  Hooper,  119  Mass.  52. 

8  McCann  v.  Randall,  147  Mass.  81.    Seesupra, p.  9  and  infra,  p.  191. 
*  Hawley  v.  James,  7  Paige,  213.  5  Supra,  pp.  7  and  9. 

6  In  some  recent  cases  the  beneficiary  has  been  allowed  to  sue  in  his 
own  name,  where  he  had  a  right  to  use  the  trustee's  name.     Ander- 
son v.  Daley,  38  App.  Div.  (N.  Y.)  505 ;  Zimmerman  v.  Makepeace, 
152  Ind.  199.    In  Bourquin  v.  Bourquin,  110  Ga.  440,  the  beneficiary 
was  allowed  to  bring  ejectment  against  his  trustee,  who  claimed  the 
trust  estate  under  the  purchase  of  a  tax  title. 

7  Morgan  v.  Kansas  Pacific  Railroad,  21  Blatchf.  134;  Thompson  u 
Remsen,  27  Misc.  (N.  Y.)  279. 

«  Chamberaburg  Ins.  Co.  v.  Smith,  11  Pa.  St.  120. 


170  CAN   COMPEL  WHAT 

The  beneficiary  has  no  right  to  advise  or  direct  his 
trustee  unless  the  right  be  expressly  conferred  by  the  trust 
instrument,  and  if  his  advice  be  asked  and  followed,  he 
may  lose  his  remedy  against  the  trustee  should  the  ac- 
tion be  injudicious ;  therefore,  on  the  whole,  it  is  better 
to  leave  the  full  responsibility  on  the  trustee,  where  it 
belongs.1 

If  an  express  power  be  given  by  the  trust  instrument, 
it  is  governed  by  the  general  rules  applicable  to  such 
powers. 

He  can  have  the  trustee  enjoined  from  committing  a 
contemplated  breach  of  trust,  or  voting  against  his  wishes 
if  it  would  cause  him  irreparable  injury.2 

He  may  have  a  receiver  appointed  to  hold  the  property 
if  it  is  imperilled  by  remaining  in  the  hands  of  the  trus- 
tee, and  pending  his  removal  and  the  appointment  of  a 
new  trustee.8 

In  England  and  some  of  the  States  he  may  have  the 
estate  administered  by  the  court,4  but  such  receivership 
suits  are  not  in  vogue  in  this  country  in  trust  estates.6 

If  the  trustee  commits  a  breach  of  trust,  the  benefi- 
ciary may  either  sue  in  equity  for  his  damage  or  loss,  or 
in  testamentary  trusts  may  sue  on  the  bond  given  to  the 
court. 

If  the  trustee  has  been  guilty  of  a  breach  of  trust  in  in- 
vesting or  using  the  funds  of  the  trust,  the  beneficiary  may 
elect  whether  he  will  take  the  property  into  which  the 
funds  have  been  converted,  or  the  amount  taken  with 
interest.6  But  he  must  choose,  and  cannot  pursue  both 
remedies ; 7  and  if  he  disaffirms  a  sale,  he  must  return  the 

1  Bradby  v.  Whitchurch,  W.  N.  1868,  p.  81 ;  Life  Ass'n  of  Scotland 
v.  Siddal,  3*DeG.,  F.  &  J.  58,  74. 

2  Ames  276,  n.  2. 

8  Jones  v.  Dougherty,  10  Ga.  273.  4  Supra,  p.  7. 

6  Underbill,  pp.  366  and  440.  6  Supra,  p.  1 54. 

7  Barker  v.  Barker,  14  Wis.  131  ;  Perry,  §  470  (3).     See  trustee's 
liabilities  to  beneficiary,  supra,  p.  154  ;  Rev.  Civ.  Code  So.  Dak.  (1903), 
§1626;  Code  Ga.  (1895),  §§3183,3184;  Rev.  Code  N.  Dak.  (1895), 
§  4273;  Civ.  Code  Cal.  (1903),  §  2237. 


CAN   COMPEL   WHAT  —  RIGHT  TO   INCOME         171 

consideration  in  absence  of  fraud.1  If  he  follows  the 
property  and  it  is  insufficient,  he  may  prove  his  claim  for 
the  balance ;  but  if  the  beneficiaries  are  not  agreed,  the 
court  will  order  whichever  remedy  it  thinks  best  under  the 
circumstances.2 

In  general,  the  damage  recoverable  is  the  amount  of 
the  loss  for  the  remainderman,  with  simple  interest  for  the 
life  tenant;  but  compound  interest  is  allowed  when  the 
income  was  to  be  added  to  the  principal  periodically,  or 
where  there  is  a  presumption  that  more  was  earned,  or  the 
breach  was  wilful.8 

Right  to  Information.  —  The  beneficiary  has  a  right  to 
full  information  about  the  concerns  of  the  trust  at  all  rea- 
sonable times,  although  only  contingently  interested.4 

He  can  examine  the  deeds  or  opinions  of  counsel  con- 
sulted by  the  trustee  in  respect  to  the  trust  affairs,6  but,  as 
a  condition  precedent,  he  must  show  his  interest,  and  may 
not  examine  them  to  establish  an  interest.  He  can  ex- 
amine the  books  of  accounts  and  securities  at  all  reason- 
able times,  and  is  entitled  to  an  accounting  at  reasonable 
intervals,  usually  once  a  year.6 

But  he  has  no  right  to  demand  that  the  trustee  shall 
assist  him  in  encumbering  his  interest  by  answering  the 
inquiries  as  to  how  his  interest  is  already  encumbered, 
nor  can  a  stranger  acting  under  his  authority  require  the 
trustee  to  answer.7 

Right  to  Income.8  —  In  a  simple  trust,  as,  for  instance, 
where  A  holds  property  in  trust  to  permit  B  to  enjoy  the 
income,  the  income  as  it  accrues  belongs  to  B  imme- 

1  Yeackel  v.  Litchfield,  13  Allen,  417  ;  Marx  ».  Clisby,  130  Ala.  502 

2  Morse  v.  Hill,  136  Mass.  60.  8  Supra,  p.  154. 
«  Sloan's  Estate,  7  Pa.  Dist.  Rep.  363  (1898). 

6  Smith  v.  Barnes,  L.  R.  1  Eq.  65  ;  Ames,  470,  n. 

•  As  to  accounts,  see  supra,  p.  91. 

'  Low  v.  Bouverie,  3  Ch.  D.  1891,  p.  82. 

8  As  to  what  is  income,  see  supra,  pp.  121  et  seq. 


172  RIGHT   TO   INCOME 

diately,  and  he  may  require  the  trustee  to  give  him  a 
power  of  attorney  to  collect  it  for  himself;  but  in  the 
case  of  an  ordinary  trust,  income  means  net  income  after 
deducting  the  taxes  and  repairs  and  ordinary  current 
expenses  attending  the  estate.1  So  the  trusteee  is  entitled 
to  collect  it,  and  make  the  necessary  deductions  before 
pa3*ing  it  over. 

In  such  cases  the  net  income  can  only  be  ascertained 
yearly,  and  therefore  would  seem  to  be  payable  only  on 
the  settlement  of  the  yearly  account ;  but  as  the  income 
belongs  to  the  beneficiary,  the  court  would  probably  not 
allow  a  large  amount  to  lie  in  the  hands  of  the  trustee  for 
such  a  long  period  if  the  beneficiary  needed  it.2 

Most  trust  instruments  have  an  express  provision  that 
the  net  income  shall  be  paid  quarterly  or  semiannually, 
which  provision  would  govern  in  all  cases. 

There  has  been  much  discussion  in  England  as  to  the 
beneficiary's  share  of  the  first  year's  income,  and  the  de- 
cisions have  been  classified  by  Mr.  Lewin.8 

In  Massachusetts,  by  statute  the  life  beneficiary  is  en- 
titled to  the  income,  at  the  .rate  of  interest  it  would  have 
produced  if  properly  invested,4  on  the  fund  given  for  his 
use  from  the  date  of  the  testator's  death  ;  and  where  the 
whole  or  a  part  of  the  fund  does  not  produce  income,  on 
the  conversion  of  the  property  the  proceeds  are  divided 
into  income  and  principal  so  as  to  give  the  life  benefi- 
ciary the  usual  rate  of  income,  as  explained  supra,  page 
123.  In  other  jurisdictions,  in  the  absence  of  statute  the 
beneficia^-  only  gets  the  actual  income  that  accrues  on 
the  fund,6  but  the  intention  of  the  settlement,  express  or 
implied,  will  govern,  if  it  can  be  discovered.6 

1  Watts,  Adm.  i>.  Howard,  Adm.,  7  Met.  478.    Supra,  pp.  137  et  seq. 

2  In  re  Chesterman,  75  App.  Div.  (N.  Y.)  573. 
8  Lewin,  pp.  321  et  seq. 

4  Loring  v.  Thompson,  184  Mass.  103. 

6  Williamson  v.  Williamson,  6  Paige,  298 ;  Fanning  v.  Main,  77 
Conn.  94. 

6  Keith  v.  Copeland,  138  Mass.  303. 


RIGHT   TO   INCOME  —  RIGHT   TO   A   CONVEYANCE      173 

The  trustee  may  withhold  income  to  reimburse  himself 
for  money  erroneous!}*  paid  to  the  beneficiary,  but  cannot 
reimburse  himself  in  this  manner  for  an  individual  loan 
made  before  he  became  trustee.1 

As  to  what  constitutes  income,  see  pages  123  et  seq. 

Right  to  Support.  —  The  question  of  the  beneficiary's 
right  to  support  has  been  treated  already.2  In  Georgia 
there  is  an  unusual  statutory  provision,  that  where  the 
trustee  fails  to  support  the  beneficiary,  the  latter  may 
contract  debts  binding  the  trust  property.8 

Right  to  a  Conveyance.  —  If  the  trust  is  merely  a  dry 
trust,  that  is  to  say,  if  A  is  given  property  simply  to  hold 
in  trust  for  B,  or  if  the  purposes  of  the  trust  have  been 
accomplished,  and  there  is  no  reason  why  it  should  be 
continued,  and  all  the  beneficiaries,  being  sui  juris,  desire 
it,  the  trust  may  be  terminated  or  modified  in  any  way.4 
Though  by  statute  in  New  York  the  court  ma}'  in  its  dis- 
cretion refuse  to  order  a  conveyance.5 

If,  in  such  case,  one  of  the  beneficiaries  objects,  the 
court  may  sever  the  trust,  and  order  the  shares  of  the 
others  to  be  conveyed  ; 6  but  as  a  general  rule,  the  trus- 
tee may  say  that  he  will  convey  all  or  none.7  If  the  prop- 
erty is  to  be  held  in  trust  for  children  until  all  agree  to  a 
sale,  part  cannot  call  for  a  conveyance.8 

The  English  rule,  which  also  prevails  in  some  of  the 
States,  is  that,  the  beneficial  estate  having  vested  abso- 
lutely and  entirely  in  the  beneficiary,  he  may  call  for  a 

1  Supra,  p.  134;  infra,  p.  184.  . 

2  Supra,  pp.  75  and  83. 

8  Code  of  Ga.  (1895),  §  3187. 

*  Goodson  v.  Ellisson,  3  Russell,  583;  Claflin  v.  Claflin,  149 
Mass.  19. 

6  Lent  v.  Howard,  89  N.  Y.  169. 

«  Walker  v.  Beal,  106  Mass.  109;  Henderson's  Estate,  15  Phila.  59S 

7  Goodson  v.  Ellisson,  ubi  supra. 

8  Harris  v.  Harris,  205  Pa.  St.  460. 


174  RIGHT  TO   A    CONVEYANCE 

conveyance  if  he  be  sui  juris ; l  but  the  American  rule 
prevailing  in  most  States  is  that,  although  the  beneficiary 
be  sui  juris,  and  have  the  whole  estate,  he  cannot  call 
for  a  conveyance  if  it  would  defeat  the  intention  of  the 
settlor,  as  in  such  a  case  the  purpose  of  the  trust  has  not 
been  accomplished.2  On  the  other  hand,  where  the  pur- 
pose of  the  trust  was  to  protect  a  married  woman  against 
her  husband  when  she  got  a  divorce,  the  purpose  of  the 
trust  being  accomplished  a  conveyance  was  ordered.8 

Thus,  where  property  is  left  in  trust  for  A  until  he 
reaches  the  age  of  thirty  3*ears,  under  the  English  rule  A 
may  call  for  a  conveyance  on  becoming  of  age,  while  under 
the  American  rule  the  trust  continues  until  he  becomes 
thirt}'  years  old ; 4  though  it  is  not  definitely  decided  that 
the  estate  might  not  be  taken  by  a  creditor,5  still  it  would 
seem  that  he  would  have  no  greater  right  than  his  debtor 
through  whom  he  claims.6  But  where  the  estate  is  abso- 
lute and  unqualified  in  the  beneficiary,  and  can  be  alienated 
or  taken  for  his  debts,  and  he  desires  it,  he  may  have  a 
conveyance.7 

If,  however,  all  the  beneficiaries  and  the  trustee  agree 
to  terminate  the  trusts  in  such  a  case,  as  no  one  else  is 

1  Saunders  v.  Vantier,  4  Beav.  115;  Lewin,  p.  774;  Rector  v. 
Dalby,  98  Mo.  App.  1 89.  The  trust  being  for  a  woman  and  her  issue, 
the  fact  that  she  is  sixty  years  old  and  unmarried  does  not  entitle 
her  to  a  conveyance.  Bailey's  Trustee  v.  Bailey,  97  S.  W.  Rep.  (Ky. 
App.  1906)  810. 

4  Seamans  v.  Gibbs,  132  Mass.  239;  Danahyv.  Noonan,  176  Mass. 
467  ;  Zabriskie  v.  Wetmore,  26  N.  ,T.  Eq.  18;  Hutchison's  Appeal,  82 
Pa.   509 ;  Ames,  452,  n. ;  Rhoads  v.  Rhoads,  43  111.   239 ;  Gunn   v. 
Brown,  63   Md.  96;  Smith  v.  Smith,   70  Mo.  App.  448;  Carney  v. 
Byron,  19  R.I.  283;  Krebs's  Estate,  184  Pa.  St.  222;  In  re  Moore's 
Estate,  198  Pa.  St.  611  ;  Shower's  Estate,  211  Pa.  St.  297;  Eakle  v. 
Ingraham,  142  Cal.  15  ;  Bennett  v.  Bennett,  217  111.  434. 

8  Gary  v.  Slead,  220  111.  508. 
«  Claflin  v.  Claflin,  149  Mass.  19. 

5  Ibid. ;  Ullman  v.  Cameron,  92  App.  Div.  (N.  Y.)  91. 

6  Young  v.  Snow,  167,  Mass.  287. 

7  Sears  v,  Choate,  146  Mass.  395. 


BIGHT  TO  A   CONVEYANCE  —  BIGHT  TO   POSSESSION      175 

interested,  and  there  is  no  one  who  can  object  even  under 
the  American  rule,  the  trust  can  be  determined  without  a 
decree,1  but  if  the  aid  of  the  court  is  sought  it  will  not  be 
given.2 

Nothing  less  than  the  whole  of  an  absolute  estate  will 
entitle  the  beneficiary  to  a  conveyance,  even  under  the 
English  rule.  Therefore,  if  there  are  contingent  or  unas- 
certained interests  there  can  be  no  agreement.8  And  a 
beneficiary  who  has  a  life  estate,  with  power  of  disposition 
by  will,  has  not  such  an  absolute  estate  as  entitles  him  to 
a  conveyance  ; 4  nor  could  he  call  for  one  if  the  trustee  has 
discretion  as  to  the  application  of  the  income.6  If,  how- 
ever, the  interest  of  the  beneficiary  is  vested  subject 
merely  to  some  simple  duty,  such  as  the  payment  of  an 
annuity,  the  beneficiary  may  have  a  conveyance  by  secur- 
ing the  annuity  properly.  But  obviously  the  maker  of  the 
trust  can  prevent  the  beneficiary's  calling  for  a  conveyance 
even  under  the  English  rule,  by  making  a  small  provision 
for  some  person  unascertained,  or  for  the  trustee  himself. 

The  trustee  cannot  set  up  superior  title  in  a  suit  for  a 
conveyance.6  Nor  can  the  beneficiary  deny  the  trustee's 
title  if  he  is  his  landlord,  nor  can  the  beneficiary  buy  in  a 
tax  title  and  hold  it  against  the  estate.7 

Right  to  Possession.  —  Ordinarily  in  America  the  right 
to  possession  of  the  real  estate  and  chattels  belongs  to  the 
trustees  ; 8  but  if  the  instrument  intends  that  the  beneficiary 
is  to  enjoy  them  in  specie,  he  will  be  entitled  to  possession, 

1  Lemen  v.  McComas,  63  Md.  153. 
4  Young  v.  Snow,  w6i  supra. 

8  Brandenburg  v.  Thorndike,  139  Mass.  102  ;  Walton  v.  Follansbee, 
131  111.  147;  Moore  v.  Sinnott,  117  Ga.  1010. 
«  Sise  v.  Willard,  164  Mass.  48. 

6  Russell  v.  Grinnell,  105  Mass.  425. 
«  Neyland  v.  Bendy,  69  Tex.  711. 

7  Supra,  p.  45. 

»  Dorr  v.  Wainwright,  13  Pick.  328.     Supra,  pp.  45  and  100.- 


176  RIGHT    TO    POSSESSION 

and  by  statute  in  England  the  right  of  possession  is  in  the 
beneficiary.1  As,  for  instance,  where  he  is  intended  to 
reside  in  a  house  and  use  the  furniture.  But  where  the 
personal  property  is  likely  to  be  injured  or  lost  in  his  pos- 
session, he  may  be  required  to  give  security  for  it.  If  he 
is  given  the  use  of  personal  property  he  may  wear  it  out, 
and  neither  he  nor  the  trustee  will  be  required  to  replace 
it ;  and  unless  it  is  heirlooms  or  the  appurtenances  of  an 
estate,  such  as  the  tools  on  a  farm  or  the  furniture  of  a 
furnished  house,  he  ma}'  use  them  wherever  he  pleases.2 

Where  the  instrument  has  no  specific  directions,  the 
trustee  will  be  justified  in  putting  the  beneficiary  in  posses- 
sion of  a  dwelling-house  or  farm  as  a  home;  but  the  bene- 
ficiary cannot  compel  him  to  buy  him  a  residence,  though 
the  trustee  may  do  so.8 

The  beneficiary  has  no  right  to  the  possession  of  the 
trust  securities ;  but  where  he  is  given  the  dividends  on 
certain  specific  stocks,  or  the  rents  of  certain  specific 
estates,  he  can  require  the  trustee  to  give  him  a  power  of 
attorney  to  collect ;  but  where  the  trustee  has  the  duty  to 
manage  the  estate  and  pay  over  the  net  income,  the  bene- 
ficiary has  no  such  right. 

The  Beneficiary  may  lose  his  Rights  against  the  Trus- 
tee by  Release,  Acquiescence,  and  the  Running  of  the 
Statute  of  Limitations.  —  If  the  beneficiary  is  sui  juris,* 
and  fully  informed,  and  has  a  full  knowledge  and  appre- 
ciation of  the  facts,  he  may  make  a  valid  and  binding 
release  of  any  claim  he  has  against  the  trustee  for  a 
breach  of  trust  or  otherwise.8  If,  however,  the  beneficiary 

1  Ames,  467,  n.  2. 

2  Supra,  pp.  107,  125  ;  Lewin,  p.  768. 

8  Schaffer  v.  Wadsworth,  106  Mass.  19.     Supra,  p.  111. 

4  A  married  woman  is  sui  juris,  and  may  release  as  to  her  separate 
estate,    Walker  v.  Shore,    19   Ves.  Jr.  387 ;  but  a  married  woman 
without  power  of  anticipation  cannot  release.    Fyler  v.  Fyler,  3  Beav. 
550,  563. 

5  Pope  v.  Farnsworth,  146  Mass.  339;  Brice  v.  Stokes,  11  Ves.  Jr. 
319,  325. 


HOW   BENEFICIARY   MAY   LOSE   HIS  BIGHTS        177 

has  come  of  age  latel}',  he  should  be  advised  by  counsel, 
as  his  inexperience  may  form  a  ground  to  invalidate  his 
action.1  Nor  will  a  beneficiary  be  bound  by  his  release 
if  there  was  fraud,  accident,  or  mistake.2 

If  the  beneficiary  knew  and  urged  a  breach  of  trust,  he 
not  only  cannot  recover,  but  is  liable  to  contribution,8 
even  though  the  beneficiarj7  be  a  married  woman  without 
power  of  anticipation.4 

If  the  beneficiary  who  is  sui  juris  assents  to  a  breach 
of  trust,  such  as  an  improper  sale 5  or  investment,  he 
cannot  subsequently  recover  the  loss,  if  he  was  fully  in- 
formed ;  but  the  assent  to  one  improper  investment  will 
not  authorize  a  second  of  the  same  character.6  If  he  has 
been  misled  by  the  trustee  his  assent  will  not  conclude, 
him,  and  he  may  disaffirm  the  transaction  on  learning  the 
truth,7  even  though  the  transaction  has  been  set  forth  in 
an  account  settled  in  court.8  So,  also,  if  the  beneficiary 
who  is  sui  juris  knows  of  a  breach  of  trust,  and  neglects 
to  make  any  claim,9  or  does  not  make  it  for  an  unreason- 
able time,10  he  will  be  taken  to  have  assented,  and  so  cannot 
complain  ;  if  he  had  no  reason  to  suspect  a  breach  of  trust 
he  is  not  bound  to  inquire,  though  he  might  have  dis- 
covered it  had  he  done  so,11  but  time  will  not  deprive  a 
beneficiary  of  his  remedy  unless  he  has  been  guilty  of 

1  Wade  v.  Lobdell,  4  Cash.  510;  Field  v.  Middlesex  Banking  Co., 
77  Miss.  180.    The  ordinary  statutes  of  limitations  apply  in  England 
now.     Trustee's  Act,  1888  (51  &  52  Viet.),  ch.  59,  §  8. 

2  Perry,  §  922. 

8  Raby  v.  Ridehalgh,  7  DeG.,  M.  &  G.  104.     See  supra,  p.  151. 
*  Generally,  but  by  statute  in  England.    See  Griffith  v.  Hughes, 
3  Ch.  D.  (1892),  p.  105. 

6  Fryberger  o.  Turner,  109  N.  W.  Rep.  (Minn.  1906)  229. 

6  Mant  v.  Leith,  15  Beav.  524;  Adair  v.  Brimmer,  74  N.  Y.  539. 

^  Nichols,  Appellant,  157  Mass.  20. 

8  Morse  v.  Hill,  136  Mass,  60. 

9  Badger  v.  Badger,  2  Wall.  87. 

1°  Denholm  v.  McKay,  148  Mass.  434,  441 ;  Treadwell  v.  Treadwell, 
176  Mass.  554;  Quirk  v.  Liebert,  12  App.  D.  C.  394. 
11  Lamberton  v.  Yonmans,  84  Minn.  109. 

12 


178         HOW   BENEFICIARY   MAY   LOSE   HIS  RIGHTS 

laches.1  A  remainderman  may  interfere  to  protect  the 
estate  during  the  life  tenancy,  but  he  is  not  guilty  of  laches 
or  acquiescence  until  the  estate  comes  into  his  possession.2 
But  a  minor  may  cut  himself  off  by  inducing  the  trustee  to 
act  by  fraud.8 

What  constitutes  laches  depends  on  the  circumstances 
of  each  case,  but  as  a  general  rule  mere  lapse  of  time  alone 
will  not  bar  the  beneficiary  where  the  position  of  others 
has  not  been  changed.4  Lapse  of  time  with  circumstances 
indicating  an  intention  to  abandon  the  trust  are  sufficient 
to  bar  a  recovery.5 

A  beneficiary  who  has  delayed  electing  whether  or  not 
to  confirm  a  sale,  in  order  to  see  whether  the  property  will 
rise  or  fall,  cannot  elect  at  a  later  time.' 

Ordinarily  the  statute  of  limitations  will  not  run  against 
the  beneficiary,7  since  the  possession  of  the  trustee  is  in 
the  interest  of  the  beneficiary ;  but  if  the  trustee  takes  an 
adverse  position,  repudiates  the  trust,  and  brings  the  mat- 
ter home  to  the  beneficiary  so  that  he  is  compelled  to  take 
action,8  he  may  take  the  benefit  of  the  statute,  and  the 
time  will  run  from  the  date  when  he  brought  his  adverse 
claim  distinctly  to  the  beneficiary's  notice  ;  9  but  the  stat- 

1  Prevost  v.  Gratz,  6  Wheat.  481,  498,  Story,  J.  Transfer  of  shares 
after  sixty  years  held  barred.   Halsey  v.  Tate,  52  Pa.  St.  311 ;  Iverson 
v.  Saulsbury,  65  Ga.  724 ;   Speidel  v.  Henrici,  120  U.  S.  377. 

2  Stewart  v.  Conrad's  Adm'r,  100  Va.  128 ;  Bennett  v.  Colley,  5  Sim. 
181 ;  8.  c.  2  Myl.  &  K.  225  ;  but  see  Browne  v.  Cross,  14  Beav.  105. 

8  Preceding  page,  n.  3. 

4  Morse  v.  Hill,  136  Mass.  60,  65,  66  ;  In  re  Jones's  Estate,  30  Misc. 
(N.  Y.)  354;  Blake  v.  Traders'  Nat'l  Bank,  145  Mass.  13. 
8  Sawyer  v.  Cook,  188  Mass.  164. 

6  Hoyt  v.  Latham,  143  U.  S.  553;  Curtis  v.  Lakin,  94  Fed.  Rep. 
251  (C.  C.  Utah,  1899) ;  Skelding  v.  Dean,  141  Mich.  143. 

7  Speidel  v.  Henrici,  120  U.  S.  377 ;  Riddle  v.  Whitehill,  135  U.  S. 
621. 

8  Philippi  u.  Phillippe,  115  U.S.  151 ;  Davis  v.  Coburn,  128  Mass. 
377  ;  Hubbell  v.  M«dbury,  53  N.  Y.  98  ;  Thome  v.  Foley,  137  Mich.  649. 

9  Statute  runs  from  time  of  distribution,  Jones  v.  Home  Savings 
Bank,  118  Mich.  155;  or  from  date  of  decree  of  distribution,  supra, 
p.  145. 


HOW   BENEFICIARY  MAY  LOSE   HIS  BIGHTS        179 

ute  will  not  begin  to  run  against  the  remainderman  until 
his  estate  vests  in  possession,  nor  will  it  begin  to  run  so 
long  as  the  beneficiary  is  under  the  control  of  the  trustee. 

TV.  Rights  against  Strangers.  —  The  beneficiary  has 
no  claim  to  the  property  itself, *  but  he  may  constitute  any 
person  into  whose  hands  it  has  come  wrongfully  a  trustee 
for  him.2  As,  for  instance,  a  bank  which  has  received 
stocks  and  bonds,  which  it  knows  belong  to  the  trust 
estate  as  security  for  a  personal  loan  to  the  trustee,  holds 
the  stocks  and  bonds  in  trust  for  the  beneficiaries.8  Al- 
though the  beneficiary  must  sue  in  the  name  of  the  trustee, 
the  defendant  cannot  set  up  the  defence  that  the  trustee 
was  a  joint  wrongdoer  in  pari  delicto.* 

A  disseisor  will  not  be  held  a  trustee,  since  he  claims 
the  property  by  a  title  which  supersedes  that  of  the  trus- 
tee ; 6  and  a  purchaser  for  value  without  notice  takes  the 
property  free  of  trust,  although  he  claims  under  the  trus- 
tee, that  is  to  sa}',  if  the  transferee  bought  the  estate  for 
value,  without  notice  of  the  trust,  then  he  in  a  court  of 
equity  is  equally  meritorious  with  the  beneficiary,  and  the 
court  will  not  help  the  beneficiary  against  him,  and  so  he 
ma}'  keep  his  legal  title,  and  will  not  be  compelled  to  hold 
it  as  trustee.6 

A  purchaser  with  notice  from  the  trustee,  if  he  denies 
the  beneficiary's  title,  can  avail  himself  of  statute,  and  it 
will  begin  to  run  from  the  time  when  the  beneficiary  is  in 
possession  and  not  under  disability ;  and  in  case  of  fraud, 
from  the  discovery  of  the  fraud,  or  when  it  might  have  been 

1  Stirapson.  Am.  Statute  Law,  p.  237. 

2  Third  National  Bank  v.  Lange,  51  Md.  138. 

3  Loring  v.  Brodie,  134  Mass.  453 ;  Blake  v.  Traders'  Nat'l  Bank, 
145  Mass.  13;  Tattle  v.   First   Nat'l  Bank,   187  Mass.  533.    If  the 
bondsman  has  made  good  the  loss,  he  is  subrogated  to  the  beneficiaries' 
claim. 

*  Wetmore  v.  Porter,  92  N.  Y.  76. 

6  Supra,  p.  27.  6  Supra,  p.  46. 


180  BIGHTS   AGAINST   STRANGERS 

discovered  with  reasonable  diligence ; J  and  the  usual  period 
of  adverse  possession  is  good  against  the  beneficiary.2 

Aside  from  those  who  claim  by  a  superior  or  adverse 
title,  the  beneficiar}-  may  follow  the  property  as  long  as 
it  can  be  identified  ;  and  if  it  can  be  clearty  shown  that 
other  property  has  been  substituted  for  the  trust  property, 
the  substituted  property  can  be  followed.8  Where  the 
trust  funds  form  only  part  of  the  consideration  of  the 
substituted  property,  the  trust  may  be  enforced  to  the  ex- 
tent of  the  trust  property.4 

Money  is  said  to  have  no  earmark,5  hence  if  it  becomes 
so  mingled  with  other  funds  that  its  identification  is  im- 
possible, the  beneficiary  becomes  a  simple  creditor  merely.6 
The  mere  commingling  of  the  trust  moneys  does  not  neces- 
sarily prevent  their  identification,  but  makes  it  more  diffi- 
cult.7 "  In  some  States  it  is  held  that,  while  it  is  not  enough 
to  show  that  trust  property  went  into  the  general  assets,  it 
is  enough  to  charge  the  whole  estate  with  a  trust,  if  it  can 
be  shown  that  the  proceeds  remain  somewhere  unexpended 
in  the  estate.8  But  by  great  weight  of  authority  a  trust 
cannot  be  established  against  the  proceeds  of  trust  prop- 
erty which  has  been  disposed  of,  unless  the  proceeds  can 
be  identified  and  traced  into  some  specific  fund  or  prop- 

1  McCoy  v.  Poor,  56  Md.  197. 

2  Molton  v.  Henderson,  62  Ala.  426 ;  Williams  v.  First  Presb.  Soc., 
1  Ohio  St.  478;  Ward  v.  Harvey,  111  Ind.471  ;  Hall  v.  Ditto,  12  S.  W. 
Rep.   941  (Ky.) ;  Merriam  v.  Hassam,  14  Allen,  516,  520;  Attorney 
General  v.  Proprietors,  etc.,  3  Gray,  1. 

3  For  instance,  Avhere  the  trust  estate  has  been  wrongfully  put  into 
a  business,  the  assets  of  the  business  belong  to  the  trust.    Byrne  v. 
McGrath,  130  Cal.  316;  Reeves  v.  Pierce,  64  Kan.  502;  Crawford  Co. 
Com'rs  v.  Patterson,  149  Fed.  Rep.  229. 

*  Cases  on  tracing  unmingled  funds  contra.    Underbill,  458,  n. 
6  Deg  v.  Deg,  2  P.  Wms.  411,  414. 

6  Pennell  v.   Deffell,  4  DeG.,   M.   &   G.  372,  381 ;  Wetherell  v. 
O'Brien,  140  111.  146,  151 ;  Little  v.  Chadwick,  151  Mass.  109. 

7  Houghton  v.  Davenport,  74  Me.  590. 

8  See  Slater  v.  Oriental  Mills,  18  R.  I  352,  353;  Bradley  v.  Chese- 
brongh,  111  Iowa,  126;  Hopkins  v.  Burr,  24  Colo.  502;  Pearson  u. 
Haydel,  90  Mo.  App.  253,  264  ;  Lincoln  v.  Morrison,  64  Neb.  822. 


RIGHTS   AGAINST   STRANGERS  181 

erty." l  The  trustee  will  not  be  presumed  to  have  used 
the  trust  funds  for  himself ; 2  so  the  beneficiary  may  claim 
all  the  trustee  cannot  identify,  and  repayment  to  him  on 
the  eve  of  bankruptcy  is  not  a  fraudulent  preference ; 8  but 
a  person  who  receives  property  from  an  unfaithful  trus- 
tee cannot  be  held  to  be  trustee  of  property  which  cannot 
be  connected  with  the  trust  fund.4 

Stock  is  like  money,  one  share  is  as  good  as  another ; 
so  the  beneficiary  can  take  all  shares  in  the  company  in 
the  trustee's  hands  irrespective  of  the  name  they  are  regis- 
tered in.6 

Where  the  beneficiary  has  become  a  simple  creditor,  he 
is  preferred  in  Georgia,  Missouri,  and  Wisconsin  6  next 
to  funeral  expenses,  but  generally  a  beneficiary  has  no 
preference  on  account  of  the  nature  of  his  claim.7 

1  Knowlton,  C.  J.,  in  an  exhaustive  opinion  reviewing  authorities  in 
Lowe  v.  Jones,  192  Mass.  94,  p.  101 ;  In  re  Hallett's  Estate,  13  Ch.  D. 
696;  Lebanon  Bank's  Estate,  166  Pa.  St.  622;  Marqnette  Fire  Com'rs 
v.  Wilkinson,  119  Mich.  655,  670;  Hauk  v.  Van  Ingen,   196  111.  20; 
Woodhouse   v.  Crandall,   197   111.   104;   Ellicott  v.  Kuhl,   15   Dick. 
333  ;  Burnham  v.  Earth,  89  Wis.  362 ;  Northern  Dak.  Elevator  Co. 
v.  Clark,  3  No.  Dak.  26 ;  Cushman  v.  Goodwin,  95  Me.  353 ;  Rock- 
wood  v.  School  Dist.,  70  N.  H.  388 ;  Peters  v.  Bain,  133  U.  S.  670 ; 
Frelinghuysen  v.  Nugent,  36  Fed.  229  ;  In  re  Hicks,  170  N.  Y.  195  ; 
Bircher  v.  Walther,  163  Mo.  461 ;  Morrison  v.  Lincoln  Savings  Bank, 
57  Neb.  225  ;  Morse  on  Banking,  3ded.,  §  590. 

2  National  Bank  v.  Insurance  Co.,  104  U.  S.  54 ;  In  re  Holmes,  37 
App.  Div.  (N.  Y.)  15  (1899) ;  In  re  Steinway's  Estate,  37  Misc.  Rep. 
(N.  Y.)  704. 

8  Lewin,  p.  1025 ;  U.  S.  Natl  Bk.  ».  Weatherby,  70  App.  Div. 
(N.  Y.)  279. 

1  Howard  v.  Fay,  138  Mass.  104;  but  see  Welch  v.  Policy,  177 
N.  Y.  117. 

6  Marshall  v.  Marshall,  53  Pac.  Rep.  617  (Col.  1899) ;  Draper  v. 
Stone,  71  Me.  175. 

6  Ga.  Code  (1895),  §  3189;  Bircher  v.  St.  Louis  Sheet  Metal  Co., 
77  Mo.  App.  509  ;  Evangelical  Synod  v.  Schoeneich,  143  Mo.  652 ; 
McLeod  v.  Evans,  66  Wis.  401.     See  Bowers  v.  Evans,  71  Wis.  133, 
and  Mercantile  Trust  Co.  v.  St.  Louis,  &c.  Ry.  Co.,  99  Fed.  Rep.  485 
(Cir.  Ct.  Mo.  1900). 

7  Little  v.  Chadwick,  151  Mass.  109;  Lowe  v.  Jones,  192  Mass.  94, 
p.  103  ;  Ellicott  v.  Kuhl,  60  N.  J.  Eq.  333  ;  Cavin  v.  Gleason,  105  N.  Y. 
256.     See  Amer.  &  Eng.  Encyc.  Law  (1st  ed.),  vol.  27,  p.  257. 


182  BIGHTS   AGAINST   STRANGERS 

The  beneficiary  is  not  bound  to  follow  the  trust  funds 
if  he  prefers  to  hold  the  trustee  or  his  bondsman ; l  but  he 
may  elect  which  he  will  pursue  ;  he  cannot  however  hold 
both  remedies,  and  must  elect  one  of  them.2 

If  he  elect  to  follow  the  property  he  may  choose  whether 
he  take  the  trust  propertj*  as  it  is,  or  have  it  converted 
and  charge  the  trustee  with  loss.8 

Right  against  Stranger  aiding  in  Breach  of  Trust. — 
The  beneficiary  has  a»  equitable  suit  against  a  person  who 
aids  in  a  breach  of  trust;  as  for  instance  against  a  person 
to  whom  the  trustee  has  made  a  wrongful  payment  in  dis- 
tributing the  estate,  or  a  tenant  for  life  to  whom  he  has 
paid  or  loaned  part  of  the  corpus  of  the  estate,4  and  this 
irrespective  of  the  trustee's  right  to  recover  the  payment. 
So  too  he  has  a  direct  claim  where  a  banker  delivered  up 
to  one  trustee  the  bonds 5  or  money 6  which  were  confided 
to  him  by  three  trustees,  or  where  a  corporation  trans- 
ferred stock  improperly^  that  is  to  say,  in  a  manner  which 
it  knew  to  be  a  violation  of  the  trust.7 

In  such  cases  they  will  have  notice  of  the  trust  if  it  is 
described  on  the  face  of  the  certificate,  although  the  mere 
occurrence  of  the  word  "  trustee  "  has  been  held  not  to  be 
notice;8  but  the  general  rule  seems  to  be  that  the  word 
' '  trustee  "  alone  is  a  sufficient  notice  of  a  trust  to  put  the 
purchaser  or  corporation  on  its  inquiry  as  to  the  trustee's 

1  Evans's  Estate,  2  Ashmead,  470 ;  Wayman  v.  Jones,  4  Md.  Ch. 
500;  Clark  v.  Wright,  24  S.  C.  526;  Blake  v.  Traders'  Nat'lBank,  145 
Mass.  13. 

2  Barker  v.  Barker,  14  Wis.  131 ;  Hodges  v.  Bullock,  15  B.  I.  592, 
595.  8  Supra,  pp.  154  and  170,  171. 

4  Cowper  v.  Stoneham,  68  L.  T.  R.  18;  Dixon  v.  Dixon,  L.R. 
9  Ch.  Div.  587.  Infra,  p.  184. 

6  Mendes  v.  Guedella,  2  Johns.  &  Hem.  259.     Supra,  p.  104. 

6  Magnus  v.  Queensland  N.  Bk.,  37  L.  R.  Ch.  Div.  466. 

7  Lowell,  Transfer  of  Stock,  §  66;  Loring  v.  Salisbury  Mills,  125 
Mass.  138  ;  Bayard  v.  Farmers  &  Mechanics'  Bank,  52  Pa.  St.  232. 

8  Lowell,  Transfer  of  Stock,  §  69 ;  Albert  v.  City  of  Baltimore, 
2  Md.  159;  Stockdale  v.  South  Sea  Co.,  Barnardiston,  363. 


BIGHT   AGAINST  STRANGER   IN   BREACH   OP  TRUST      183 

right  to  transfer;1  they  must  ascertain  the  right  of  the 
trustee  to  make  the  proposed  transfer  at  their  peril.  The 
fact  that  there  is  a  usage  to  make  transfers 2  is  not  an  ex- 
cuse ;  nor  can  they  rely  on  the  power  of  sale  which  accom- 
panies the  office  of  executor,8  but  must  ascertain  if  he  has 
it.  If  they  know  thatv  the  executor  is  acting  in  fact  as 
trustee,  under  the  title  of  executor,4  they  are  liable. 

As  this  duty  is  placed  upon  the  corporation,  it  may 
require  the  trustee  making  the  transfer  to  supply  the  docu- 
ments or  other  evidence  showing  his  right  to  make  the 
transfer,  but  in  the  absence  of  a  by-law  or  statute  requir- 
ing a  deposit  of  the  documents,  it  can  only  insist  on  in- 
spection of  them,  and  not  on  the  filing  of  copies.5 

If  the  beneficiary  is  actually  in  possession  of  the  trust 
property,6  he  may  maintain  any  action  for  the  property 
which  any  other  bailee  might  maintain ;  and  no  one  but 
the  trustee,  or  some  one  claiming  under  him,  can  set  up  his 
title  against  the  beneficiary,7  and  in  Pennsylvania  he  might 
maintain  an  action  for  its  recovery,8  where,  owing  to  lack 
of  equity  courts,  the  beneficiary  has  unusual  privileges.9 

Ordinarily,  the  possession  of  the  beneficiarj'  is  the  pos- 
session of  the  trustee,  and  he  must  sue  in  the  name  of  the 
trustee.10 

1  Shaw  v.  Spencer,  100  Mass.  382  ;  Bayard  v.  Farmers  &  Mechanics' 
Bank,  52  Pa.  St.  232  ;  Stenfelds  v.  Watson,  139  Fed.  R.  505.    Bat  the 
deposit  of  a  check  in  the  trustee's  individual  account  made  to  his  order 
as  "  trustee  "  is  not  notice  to  the  bank  of  a  wrongful  use  of  the  money. 
Batchelder  v.  Central  Nat'l  Bk.,  188  Mass.  25. 

2  Shaw  v.  Spencer,  100  Mass.  382. 
8  Lowell,  Transfer  of  Stock,  §  72. 
*  Ibid.,  §  73. 

6  Bird  v.  Chicago,  I.,  &  N.  Railroad,  137  Mass.  428. 

6  Newhall  v.  Wheeler,  7  Mass.  189. 

7  Stearns  v.  Palmer,  10  Met.  32. 

8  Bailey  v.  N.  Eng.  Mnt.  L.  Ins.  Co.,  114  Mass.  177. 

9  Fernstler  v.  Seibert,  114  Pa.  St.  196;  Miller  v.  Zufall,  113  Pa.  St. 
317. 

10  Supra,  p.  169,  note  6,  and  p.  178,  for  instances  where  beneficiary 
may  sue  in  own  name. 


184      BIGHT   AGAINST   STRANGER  IN   BREACH   OF  TRUST 

He  cannot  protect  the  property  in  equity  any  more  than 
at  law,  and  could  not,  for  instance,  restrain  the  assessors 
from  taxing  the  estate,1  nor  sue  in  tort  for  an  injury  to  it.2 

V.  Liabilities.  —  The  beneficiary  incurs  no  liabilities 
through  his  beneficial  ownership,  unless  it  be  for  taxation. 
He  may  be  liable  for  taxes  where  the  trustee  is  a  non- 
resident, and  such  a  tax  is  constitutional.8 

He  is  not  liable  as  an  owner,  and,  for  instance,  cannot 
be  sued  for  an  accident  caused  by  the  blowing  over  of  a 
fence.4 

He  is  not  liable  to  indictment  for  a  nuisance  on  the 
trust  property,5  and  need  not  contribute  to  protect  it  on 
foreclosure  or  otherwise.6  He  does  not  become  liable  as 
a  stockholder,  nor  where  a  property  qualification  is  needed 
does  he  gain  a  vote  by  his  ownership.7 

A  beneficiary  who  induces  a  trustee  to  commit  breach 
of  trust  is  liable  to  the  other  beneficiaries,  and  may  be 
liable  to  the  trustee,  but  his  liability  is  not  affected  by  the 
fact  that  he  is  a  benefician",  but  he  becomes  liable  by  his 
acts  as  an  individual.  If  the  trustee  pays  charges  from 
principal  which  he  should  have  paid  from  income,  or  if  the 
beneficiary  obtains  a  wrongful  advance  of  the  principal, 
the  trustee  may  withhold  his  income  to  make  up  the 
deficit,8  but  the  court  will  not  order  him  personally  to 
refund  a  payment  made  by  the  trustee  and  disallowed  in 
the  trustee's  account,  and  which  the  beneficiary  took  inno- 
cently. In  such  cases  the  trustee's  remedy  does  not  go 

1  Western  Eailroad  Co.  v.  Nolan,  48  N.  Y.  513. 

2  Loring  v.  Salisbury  Mills,  125  Mass.  138,  141. 

3  Supra,  p.  29.  *  Norling  v.  Alice,  10  N.  Y.  Sup.  97. 

5  People  v.  Townsend,  3  Hill,  479. 

6  Winslow  v.  Young,  94   Me.   145;  Coffman  v.  Gates,  110  Mo. 
App.  475. 

7  Lewin,  p.  247. 

8  Crocker  a.  Dillon,  133  Mass.  91 ;  Hammond  v.  Hammond,  169 
Mass.  83  ;  In  re  Hurlburt,  51  Misc.  R.  (N.  Y.)  263.     Supra,  p.  173. 


LIABILITIES  185 

farther  than  the  right  to  recoup  out  of  the  income ;  *  but 
his  co-beneficiary  will  have  a  right  to  recover  from  him 
personally  if  there  was  fraud  or  collusion,  or  if  he  took 
the  payment  knowing  that  he  had  no  right  to  it.'2  The 
trustee  cannot  withhold  the  income  as  against  an  assignee 
of  the  beneficiary's  estate  to  reimburse  himself  for  money 
lent  the  beneficiary  before  he  was  appointed  trustee.8 
If  he  litigates  unnecessarily,  he  may  be  liable  for  costs. 

i  Bate  v.  Hooper,  5  DeG.,  M.  &  G.  338.     Supra,  p.  121. 

*  Supra,  p.  182.     Blair  v.  Cargill,  111  App.  Div.  853. 

»  Abbott  v.  Foote,  146  Mass.  333 ;  Mass.  Rev.  Laws  (1902),  ch. 
174,  §  6;  supra,  pp.  49,  161 ;  but  see  contra,  Smith  v.  Peny,  197  Mo. 
438. 


PART  IV. 

INTERSTATE  LAW. 

Construction  of  the  Settlement. — If  the  trust  con- 
cerns personal  property,  the  validity  of  the  trust  will  be 
determined,  and  the  instrument  will  be  construed,  accord- 
ing to  the  law  of  the  place  where  the  settlement  is  made, 
in  the  absence  of  a  contrary  intention  on  the  part  of  the 
settlor.1 

If  the  settlement  is  by  deed,  the  grantor's  domicile  is 
the  place  of  making.2  If  by  will,  the  place  of  probate 
is  the  place  of  making.8 

If  the  settlor  obviously  intended  the  settlement  to  be 
governed  by  the  laws  of  some  other  jurisdiction,  the  docu- 
ment will  be  construed  according  to  this  intention.4  If  the 
trust  is  to  be  executed  elsewhere,  such  an  intention  is 
manifested ; 6  but  a  settlement  made  in  New  Jersey  cover- 
ing real  estate  both  in  New  Jersey  and  New  York  as  well 

1  Re  Megret  (1901),  1  Ch.  547  ;  In  re  Price  (1900),  1  Ch.  442  ;  Cod- 
man  v.  Krell,  152  Mass.  214 ;  Lincoln  v.  Perry,  149  Mass.  368 ;  Towns- 
end  v.  Allen,  13  N.  Y.  Supp.  73 ;  Aubert's  Appeal,  107  Pa.  St.  447 ; 
Mercer  v.  Buchanan,  132  Fed.  R.  501 ;  Merritt  v.  Corties,  71  Hun,  612 ; 
Cross  v.  U.  S.  Trust  Co.,  131  N.  Y.  330. 

2  Mercery.  Buchanan,  132  F.  501 ;  Codm.in  v.  Krell,  152 Mass.  214; 
Jones  v.  Jones,  8  Misc.  (N.  Y.)  660. 

8  Merritt  v.  Corties,  24  N.  Y.  Supp.  561 ;  Sewall  v.  Wilmer,  132 
Mass.  131;  Proctor  v.  Clark,  154  Mass.  45;  Lincoln  v.  Perry,  149 
Mass.  368 ;  Thiebaud  v.  Dufour,  54  Ind.  320. 

*  Cross  v.  U.  S.  Trust  Co.,  131  N.  Y.  330 ;  In  re  Price  (1900),  1  Ch. 
442 ;  Merrill  v.  Preston,  135  Mass.  451 ;  Robb  v.  Washington  and 
Jefferson  College,  185  N.  Y.  485;  Story,  Conflict  of  Laws,  8th  ed., 
§  479  a. 

6  Mount  v.  Tuttle,  40  Misc.  (N.  Y.)  456 ;  Keeney  v.  Morse,  71 
App.  Div.  (N.  Y.)  104;  Paschal  v.  Acklin,  27  Tex.  173;  Robb  v. 
Washington  and  Jefferson  College,  185  N.  Y.  485,  496. 


CONSTRUCTION   OP  THE  SETTLEMENT  187 

as  other  property,  does  not  indicate  that  the  testator  had 
New  York  law  in  mind,  and  will  be  construed  according 
to  New  Jersey  law.1 

If  the  trust  concerns  real  property,  its  validity  will  be 
determined,  and  the  document  will  be  construed  according 
to  the  law  of  the  jurisdiction  where  the  land  lies ;  and  the 
law  of  the  domicile  must  yield  to  the  law  of  the  jurisdiction 
where  the  land  lies.2 

If  the  trust  is  valid  according  to  the  law  of  the  place 
where  it  is  to  be  executed,  it  will  be  upheld  everywhere,  and 
the  funds  will  be  transmitted  to  the  duly  appointed  trustee.* 
This  does  not  go  so  far  as  to  allow  an  invalid  trust  to  be 
established  in  New  York,  because  later  it  is  to  be  trans- 
ferred to  a  jurisdiction  where  it  will  be  valid.4 

The  construction  adopted  by  the  court  in  the  jurisdiction 
where  the  settlement  was  made  is  conclusive  on  the  courts 
of  all  other  jurisdictions.6 

The  Execution  of  the  Trust  —  A  trust  must  be  ad- 
ministered according  to  the  law  of  the  place  of  execution.6 
Land  is  naturally  subject  to  the  laws  of  the  jurisdiction  in 
which  it  lies,7  and  no  court  would  enforce  incompatible  for- 
eign laws  as  to  personal  property  which  happened  to  be 
within  its  jurisdiction.8  Thus  a  creditor  suing  in  New 

1  Sullivan  v.  Babcock,  63  How.   Pr.   120;  Proctor  v.  Clark,  154 
Mass.  45  ;  Lincoln  v.  Perry,  149  Mass.  368  ;  Enohin  v.  Wylie,  10  II.  L. 
C.  1 ;  Jones  v.  Jones,  8  Misc.  (N.  Y.)  660. 

2  Massie  v.  Watts,  6  Cranch,  148 ;  Paschal  v.  Acklin,  27  Tex.  173; 
Lawrence's  Estate,  136  Pa.  St.  354 ;  Bingham's  Appeal,  64  Pa.  St.  345  ; 
Penfield  v.  Tower,  1  N.  D.  216  ;  Bovey  v.  Smith,  1  Vern.  144  ;  Liucolu 
».  Perry,  149  Mass.  368. 

8  Robb  v.  Washington  and  Jefferson  College,  185  N.  Y.  485  ;  Sewall 
r.  Wilmer,  132  Mass.  131,  p.  137  ;  Lanius  v.  Fletcher,  101  So.  W.  Rep. 
1076. 

*  Wood  v.  Wood,  5  Paige,  596. 

6  English  v.  Mclntyre,  29  App.  Div.  (N.  Y.)  439  ;  Laws  v.  Williams, 
56  N.  J.  Eq.  553  ;  Jones  v.  Jones,  8  Misc.  (N.  Y.)  660,  p.  662. 

6  Keeney  v.  Morse,7l  App.  Div.(N.Y.)  104;  Fayr.  Haven, 3  Met.  109. 

7  Paschal  v.  Acklin,  27  Tex.  173  ;  Massie  v.  Watts,  6  Cranch,  148. 

8  Sewall  v.  Wilmer,  132  Mass.  131,  p.  137. 


188  THE  EXECUTION   OP  THE  TRUST 

York,  where  a  Rhode  Island  trust  was  being  admin- 
istered, could  not  reach  the  income  under  New  York  law, 
although  he  might  do  so  under  Rhode  Island  law.1 

"Where  the  Trust  Exists.  —  In  the  nature  of  things  a 
trust  is  ambulatory,  and  accompanies  the  trustee  wherever 
he  is,  since  the  trust  is  an  obligation  on  the  trustee's  con- 
science to  do  his  dut}'  to  the  beneficiary.2 

Hence  wherever  he  goes,  except  as  hereinafter  noted, 
he  is  invested  with  his  legal  office,  and  may  be  called  to 
account.8  The  exception  is  when  the  office  is  created  by 
a  decree  of  court.  In  this  case  the  trustee  derives  his 
title  from  an  act  of  the  law,  and  the  effect  of  the  act  is 
confined  to  the  territorial  jurisdiction  over  which  the  law 
extends.4 

The  first  consideration  is,  therefore,  was  the  legal  title 
to  the  property  created  by  the  act  of  the  owner  of  the 
property,  or  by  a  decree  of  court? 

If  the  trustee  is  appointed  by  the  settlor,  whether  the 
settlement  be  by  deed  or  by  will,  his  right  to  enforce 
the  trust  will  be  respected  everywhere  5  upon  his  compty- 
ing  with  the  observances  of  local  law,  such  as  recording 
the  deed  or  filing  the  will.6 

Thus  he  may  sue  for  the  trust  property  or  transfer  it  in 
amr  jurisdiction.7 

1  Keeney  v.  Morse,  71  App.  Div.   (N.   Y.)  104.     See  First  Nat'l 
Bk.  v.  Nat'l  Broadway  Bk.,  156  N.  Y.  459,  p.  472. 

2  Sw/>ra,  pp.  25  and  158. 

3  Massie  v.  Watts,  6  Cranch,  148, 160  ;  Memphis  Savings  Bank  v. 
Houchens,  115  Fed.  96,  p.  108. 

4  Curtis  v.  Smith,  6  Blatchf .  537,  pp.  546-549 ;  Jenkins  v.  Lester, 
131  Mass.  355;  Leland  v.  Smith,  131  Mass.   358.    In  Jones  v.  Jones, 
8  Misc.  (N.  Y.)  660,  an  Illinois  trust  was  enforced  in  New  York,  the 
parties  being  all  there. 

6  Schwartz  v.  Gerhardt,  44  Oregon,  425-431  ;  Smith  v.  Davis,  90 
Cal.  25 ;  Curtis  v.  Smith,  6  Blatchf.  537,  p.  549 ;  Bradford  v.  King,  18 
R.  I.  743 ;  Iowa  &  Cal.  Land  Co.  v.  Hoag,  132  Cal.  627. 

6  Curtis  v.  Smith,  6  Blatchf.  537,  p.  549. 

*  Pennington  v.  Smith,  69  Fed.  R.  1 88 ;  Toronto  Trust  Co.  v.  C., 
B.  &  Q.  R.  R.,  123  N.  Y.  37. 


WHERE   THE    TRUST    EXISTS  189 

So,  too,  he  may  be  sued  or  forced  to  account  wherever 
he  may  be  found,1  and  the  court  may  commit  him  for  con- 
tempt if  he  fails  to  obey  its  decree.2 

In  matters  affecting  the  title  to  land,  and  other  actions 
which  are  local  in  their  character,  he  would,  like  other  in- 
dividuals, be  answerable  in  the  local  court  only,  and  the 
court  can  enforce  its  decree  by  removing  the  trustee  and 
appointing  one  in  his  place ; 8  but  if  the  action  is  transitory, 
such  as  a  contract  for  sale,  he  would  be  answerable  in  any 
jurisdiction  where  he  was  sued,  even  though  the  contract 
or  matter  in  controversy  affected  land.4  Thus  a  trustee 
of  a  railroad  mortgage,  which  covered  land  situated  in 
several  States,  might  be  ordered  by  the  court  of  one  State 
to  foreclose  the  whole  mortgage.5 

When  the  Trustee  is  Appointed  by  Judicial  Decree, 
the  title  to  the  trust  property  is  generally  vested  in  him 
by  the  decree.6  This  decree  has  no  force  beyond  the  ter- 
ritorial jurisdiction  of  the  court,  and  to  enforce  his  trust  in 
another  jurisdiction  he  must  receive  an  ancillary  appoint- 
ment.7 Thus  a  trustee  appointed  in  Maryland  could  not 
transfer  real  estate  in  West  Virginia.8 

If  the  trustee  has  a  legal  title  to  the  property  he  may 
sue  in  a  foreign  jurisdiction  to  recover  the  property  if  the 
decree  of  the  home  State  is  not  necessary  to  establish  that 

1  Supra,  pp.  168,  169 ;  Brown  v.  Desmond,  100  Mass.  267. 

2  Kildare  v.  Eustace,  1  Vernon,  405  ;  Cooley  v.  Scarlett,  38  111,  316  ; 
Story,  Eq.  Juris.,  llth  ed.,  §  1291. 

8  Cooley  v.  Scarlett,  38  HI.  316  ;  Story,  Eq.  Juris.,  llth  ed.,  §  1291. 

4  Massie  v.  Watts,  6  Cranch,  148 ;  Memphis  Savings  Bank  v. 
Houchens,  115  Fed.  96;  Bispham's  Eq.  §  47;  Jenkins  v.  Lester,  131 
Man  355. 

8  Mnller  v.  Dows,  94  U.  S.  444. 

8  Supra,  p.  11. 

*  Curtis  v.  Smith,  6  Blatchf.  537  ;  Mass.  Rev.  Laws,  147,  §  9  ;  Gen. 
Stats.  Conn.  (1902),  §  256;  Maine  Rev.  Stats.  (1903),  ch.  66,  §  69,  and 
statutes  passim. 

8  Wilson  v.  Braden,  48  W.  Va.  196  ;  Iowa  &  California  Land  Co.  v. 
Hoag,  132  Cal.  627 ;  Ay  res  v.  Siebel  &  Co.,  82  Iowa,  347. 


190      WHEN  TRUSTEE  IS  APPOINTED  BY  JUDICIAL  DECREE 

title.  The  fact  that  there  is  a  foreign  trust  attached  to 
that  title  by  foreign  decree  will  not  defeat  it1 

For  the  same  reason  a  trustee  by  judicial  act  can  only 
be  sued,  and  is  accountable  only  in  the  jurisdiction  where 
he  was  appointed.2  A  court  in  a  foreign  jurisdiction  may 
appoint  a  trustee  to  carry  out  a  foreign  will,  if  it  has  the 
trust  property  in  its  jurisdiction.8  It  is  usually  provided 
by  statute  that  the  trustee  appointed  in  the  original  ju- 
risdiction may  take  out  ancillary  administration.  If  he 
takes  out  ancillary  administration,  he  is  answerable  in 
the  subsidiai'y  jurisdiction  for  the  property  which  lies  in 
that  jurisdiction,4  and  that  court  may  order  the  property 
to  be  distributed  under  its  own  decree,  or  may  order  it  to 
be  transferred  to  the  original  jurisdiction.5  The  trustee  in 
the  principal  jurisdiction  is  accountable  only  for  the  balance 
transferred  after  settling  his  accounts  in  the  subsidiary 
jurisdiction.6 

Even  though  the  trustee  has  removed  from  the  juris- 
diction the  court  will  retain  control  of  the  trust,  and 
may  remove  the  trustee  and  appoint  one  to  act  in  his 
place.7 

This  exclusive  control  of  a  trust  vested  in  the  court  in 
which  it  originates  may  be  divested  by  the  court's  making 

1  Fidelity  Ins.  Co.  v.  Nelson,  30  Wash.  340  ;  Pennington  v.  Smith,  69 
Fed.  188;  Toronto  Gen.  Trust  Co.  v.  C.,  B.  &  Q.  R.  R.,  123  N.  Y.  37; 
Bradford  v.  King,  18  R.  I.  743. 

2  Penn  v.  Brewer,  12  Gill  &  J.  113;  Snyder  v.  Suyder,  1  Md.  Ch. 
295;  Fay  v.  Haven,  3  Met.  109;  Sewall  v.  Wilmer,  132  Mass.  131, 
p.  137 ;  Jenkins  v.  Lester,  131  Mass.  555  ;  Pennington  v.  Smith,  69  Fed. 
R.  188 ;  Smith  v.  Calloway,  7  Blatchf.  86  ;  Gulick  v.  Gulick,  3  Atl.  354. 
(See  Jones  v.  Jones,  8  Misc.  R.  (N.  Y.)  660,  and  Paget  v.  Stevens,  143 
N.  Y.  172.) 

8  Rev.  Stats.  Ohio  (1890),  §  5993. 
*  Clark  v.  Blackington,  110  Mass.  369. 

6  Welch  v.  Adams,  152  Mass.  74;  Emery  v  Batchelder.  132  Mass. 
452 ;  Linton  v.  Shaw,  95  Ga.  683. 

6  Clark  v.  Blackington,  110  Mass.  369. 

7  Pennington  v.  Smith,  69  Fed.  188;  McCann  v.  Randall,  147  Mass. 
81 ;  Chase  v.  Chase,  2  Allen,  101 ;  Curtis  v.  Smith,  6  Blatchf.  537. 


WHEN  TRUSTEE   IS  APPOINTED  BY  JUDICIAL  DECREE      191 

a  final  disposition  of  the  trust,1  and  it  has  been  held  that 
where  a  trust  originated  in  Massachusetts,  and  both  of  the 
original  trustees  had  died,  the  New  York  court  might 
appoint  substitute  trustees.2  In  this  case  the  original 
appointment  was  b}*  the  testator,  and  it  was  held  that  the 
trust  was  not  established  by  the  probate  of  the  will  in 
Massachusetts,  and  therefore  was  not  a  trust  established 
by  judicial  decree  until  substituted  trustees  were  appointed 
in  New  York. 

Non-resident  Trustee.  —  When  the  trustee  removes 
from  the  State  or  remains  out  of  the  jurisdiction,  he  may 
be  removed ; 8  or  if  he  dies,  the  vacancy  can  be  filled  al- 
though the  trust  fund  has  been  removed.4 

If  the  property  is  within  the  jurisdiction  and  there  is  a 
statute  vesting  the  estate  in  a  new  trustee,  the  matter  will 
be  terminated ;  but  if  there  is  no  personal  service  on  the 
absent  trustee  and  the  property  is  with  him,  as  in  the  case 
of  personal  property,  or  if  there  is  no  statute  vesting  the 
estate  in  the  new  appointee,  a  conveyance  must  be  obtained 
from  the  former  trustee,  and  the  new  trustee  can  sue  him 
wherever  he  can  find  him.6 

In  Pennsylvania,  the  court  may  appoint  a  co-trustee  for 
a  non-resident  trustee ;  *  but,  as  a  rule,  it  will  not  appoint 
a  non-resident  trustee,  and  in  some  jurisdictions  it  is  for- 
bidden to  do  so ; 7  in  others,  where  the  beneficiary  is  a 
foreigner,  it  will  appoint  a  foreign  trustee.  If  a  non- 
resident trustee  holds  land  and  neglects  his  dut}T,  the 

1  Schwarz  v.  Gerhardt,  44  Oregon,  425,  431 ;  Linton  v.  Shaw,  95  Ga. 
683. 

2  Farmers'  Loan  &  Trust  Co.  v.  Pendelton,  37  Misc.  (N.  Y.)  256. 
8  Supra,  p.  24.     Smith  v.  Davis,  90  Cal.  25. 

*  Curtis  v.  Smith,  6  Blatchf.  537. 

6  See  supra,  pp.  168,  169.  Jones  v.  Jones,  8  Misc.  (N.  Y.)  660, 
p.  673. 

6  Brightly's  Dig.  Pa.   (1894),  p.  2034,  §  52.     A  singular  remedy, 
since  joint  action  of  the  trustees  is  indispensable. 

7  Supra,  p.   19.    Non-resident  trustees  are    usually  required  by 
statute  to  appoint  an  agent  within  the  State. 


192  NON-RESIDENT  TRUSTEE 

court  can  in  some  States  by  statute  appoint  a  trustee,  and 
order  the  land  sold.1 

The  court  can  give  a  foreign  trustee  leave  to  sell  land, 
and  remove  the  proceeds  to  the  jurisdiction  of  his  original 
appointment.2  So,  too,  it  can  order  personal  property 8  to 
be  conveyed  to  a  non-resident  trustee  where  the  beneficiaries 
live  out  of  the  State,4  and  where  it  is  satisfied  that  a 
proper  bond  has  been  given.5 

Where  a  trustee  takes  out  ancillary  trusteeship,  he  must 
settle  his  account  in  the  principal  jurisdiction  for  any  sur- 
plus funds  in  his  hands  after  settling  his  account  in  the 
subsidiary  jurisdiction.6  The  ancillary  jurisdiction  may 
order  the  trust  fund  to  be  transferred  to  the  origiual 
jurisdiction,  or  may  order  a  continuation  of  the  trust  under 
its  own  orders.7 

A  trustee  need  not  inventory  or  account  for  foreign  real 
estate,  or  the  rents  of  it,  in  the  jurisdiction  of  his  appoint- 
ment.8 

In  order  to  control  the  land,  he  must  be  appointed  in 
the  jurisdiction  where  the  land  lies,9  and  if  he  sells  by 
order  of  court  it  must  be  by  the  order  of  the  court  where 
the  land  lies. 

1  Brightly's  Dig.  Pa.  (1894),  p.  2031,  §  30.     See  also  Conn.  Gen. 
Stats.  (1902),  §  256. 

2  Rev.  Stat.  Me.  (1903),  ch.  67,  §  32;  Code  of  Va.  (1904),  §  2630; 
Code  W.  Va.  R.  L.  (1902),  §  3249. 

8  Supra,  pp.  10,  12.  The  approval  of  an  account  showing  payment 
to  a  foreign  executor  is  equivalent  to  a  decree.  Emery  v.  Batchelder, 
132  Mass.  452. 

*  Mass    R.  L.  (1902),  ch.  150,  §  27 ;  Comp.  Laws  Mich.  (1897), 
§  9302;  Brightly's  Dig.  Pa.  (1894),  p.  2032,  §  40;  Code  Va.  (1904), 
§  2632;   Gen.  Stat.  Conn.  (1902),  §  230;   Code  Ala.  (1896),  §4179; 
Code  W.  Va.  (1906),  §§  3249-3251. 

8  Ky.  Stat.  (1899),  §§  4709-4711 ;  Gen.  Stat.  N.  J.  (1895),  p.  3685, 
§§  9,  10. 

•  Clark  v.  Blackington,  110  Mass.  369. 

7  Welch  v.  Adams,  152  Mass.  74.    See  Emery  v.  Batchelder,  132 
Mass.  452. 

8  Supra,  p.  92. 

9  Generally,  and  Mass.  R.  L.  (1902),  ch.  147,  §  9. 


FOREIGN  INVESTMENTS  193 

Foreign  Investments.  —  As  a  general  rule,  a  court  will 
not  authorize  foreign  investments  beyond  its  jurisdiction 
and  control ;  as,  for  instance,  mortgages  or  real  estate 
out  of  the  jurisdiction.1  This  rule  has,  however,  been 
more  observed  in  the  breach  than  in  the  observance  by 
trustees. 

There  may  be  good  reason  why  a  foreign  investment 
would  be  authorized,  as,  for  instance,  where  the  beneficiary 
resides  out  of  the  State  and  needs  a  home  ; 2  or  where  both 
trustee  and  beneficiary  reside  in  another  jurisdiction,  and 
only  come  into  the  jurisdiction  of  the  trust  to  account. 

Taxation. 8  —  The  trustee  will  be  taxed  on  real  estate 
where  the  land  lies,  and  ma}'  be  compelled  to  pa}'  a  tax 
on  the  income  in  his  home  State.4 

The  trustee  may  be  liable  to  taxation  on  the  personal 
property  where  he  resides,  and  if  the  beneficiary  resides 
in  another  State,  the  latter  may  also  be  liable  to  an  addi- 
tional tax.6 

The  statutes  are  too  numerous  and  varied  to  cite,  and 
the  principle  only  is  stated. 

1  Supra,  p.  116.    Ortniston  v.  Olcott,  84  N.  Y.  339. 

2  Amory  v.  Greene,  13  Allen,  413.  8  Supra,  p.  29. 

4  Snch  laws  are  not  unconstitutional.    Hunt  v.  Perry,  165  Mass.  287. 
6  Supra,  p.  184. 


13 


INDEX 


ABANDON,  trustee  cannot  abandon  trust,  20. 
ACCEPTANCE    OF    TRUST,  5. 

See  TABLE  OF  CONTENTS,  p.  vii,  §  iii. 

need  not  accept  trust,  3. 

how  made,  5. 

implied  from  meddling  in  trust,  6. 

implied  from  not  disclaiming  seasonably,  6. 

duty  to  investigate  trust  deeds  and  property,  1,  83,  92,  93. 
ACCOUNT,  generally,  91-94. 

beneficiary  entitled  to,  171. 

corrected  by  one  beneficiary  all  get  benefit,  159. 

refusal  to,  is  cause  for  removal,  23. 

must  keep  accurate  and  separate,  91. 

open  to  inspection  of  beneficiary,  91. 

should  be  settled  periodically,  91. 

settlement  in  court,  94-95. 

duty  to  examine  predecessors',  92,  93. 

form  of,  92,  93. 

liability  for  joining  in  false  account,  149,  150. 

trustee's  lien  until  settled,  145. 

effect  of,  94. 

fictitious  account  not  proper  method  of  getting  instruc- 
tions of  court,  97. 

does  not  take  place  of  decree  of  distribution,  144. 

may  amount  to  a  decree  of  distribution,  144,  n.  3. 

ends  liability,  145. 

expense  of,  charged  to  whom,  35,  95,  142. 

must  account  for  any  benefit  received,  32. 
ACCUMULATIONS  OF  INCOME,  become  principal,  126. 
ACQUIESCENCE,  in  breach  of  trust  estops  beneficiary,  177. 
ACTIONS.    See  SUITS. 

ACTIVE  TRUSTEE.    See  MANAGING  TRUSTEE. 
ADDITIONS.    See  ALTEBATIONS,  ACCUMULATIONS. 
ADMINISTRATOR.    See  EXECUTOB. 


196  INDEX 

ADMISSIONS,  by  beneficiary,  effect  of,  against  trustee,  76. 

against  each  other,  159. 

by  one  trustee,  76. 
ADVERSE  INTEREST,  trustee  cannot  have,  87. 

must  resign  if  he  acquires,  87. 

beneficiary  cannot  acquire,  45,  175. 
ADVICE,  of  counsel  excuses  what,  142,  143. 

trustee  may  ask  court,  96,  142. 

may  ask  beneficiaries',  96. 

beneficiary  no  right  to  give,  170. 
AGENT,  cannot  exercise  trustee's  powers,  67,  89. 

may  be  employed  when,  57,  90. 
ALIEN,  as  beneficiary,  157. 

as  trustee,  15. 
ALIENATION  BY  BENEFICIARY,  what  passes,  161. 

of  equitable  estate,  161-162. 

restraint  on,  163-168. 

See  RESTBAINT  ON  ALIENATION. 
ALIENATION  BY  TRUSTEE,  46-50. 

effect  of  conveyance,  46,  47. 

what  title  passes,  46,  47,  48. 

attachment  and  execution,  48. 

set  off,  49. 

ALTERATIONS,  charge  on  principal,  138. 
ANCILLARY  TRUSTEESHIP,  192. 
ANIMALS,  trusts  for,  157. 
ANTICIPATION.     See  RESTBAINT  ON  ALIENATION. 

provisions  against,  163  et  seq. 
APPEAL,  88. 

duty  to  maintain,  88. 

APPLICATION  OF  PURCHASE  MONEY,  70-71. 
APPOINTEE,  may  disclaim  trust,  3. 

APPOINTMENT,    who   administers   estate,    under   general   or 
special  power,  15. 

exercise  of  general  makes  estate  assets,  162. 
APPOINTMENT  OF  TRUSTEE,  7. 

made  when  necessary  or  proper,  7,  191. 

temporary  trustee  may  be  appointed,  7. 

how  made,  8-9. 

made  by  court  when,  8. 

what  court  has  jurisdiction,  8,  9,  10,  188-190,  192. 

made  in  what  place,  10. 

trustee  may  be  appointed  where  property  is,  190,  192. 

who  may  be  appointed  trustee,  15-18. 

foreign  appointment,  18,  192. 


INDEX  197 

APPOINTMENT  OF  TRUSTEE  (continued). 

who  are  proper  persons,  17,  18. 

incomplete  without  title  to  the  property,  11. 

regularity  not  questioned  in  collateral  proceedings,  19. 

See  TABLE  OF  CONTENTS,  p.  viii,  §  iv. 
APPORTIONMENT,  none  of  current  dividends,  126,  135. 

of  extra  stock  dividends,  127-134. 

of  interest,  136. 

of  coupons,  136. 

at  end  of  life  estate,  135. 

on  conversion  of  security,  123. 

of  expenses,  taxes,  etc.,  137-139. 

APPRECIATION  OF  PROPERTY,  belongs  to  principal,  124. 
ARBITRATION,   power  of,  75. 
ASSENT,  by  beneficiary  to  breach  of  trust,  176. 
ASSIGNEE,  of  beneficiary,  rights  of,  136. 

ASSIGNMENT,  trustee's  general  assignment  does  not  pass  trust 
estate,  47. 

beneficial  estate  may  be  assigned,  169. 

ATTACHING  CREDITOR  is  sometimes  purchaser  for  value,  47. 
ATTACHMENT,  of  trust  property  for  trust  debts,  48,  49,  77. 

of  trust  property  for  trustee's  debts,  48. 

of  beneficiary's  estate,  160,  163. 
ATTORNEY,  trustee  may  be  for  beneficiary,  86. 

expense  charged  to  trust  fund,  35,  142. 

rule  as  to  employing  self  as,  34. 
ATTORNEY  OR  AGENT,  payment  to,  144. 

trustee  may  act  by  when,  57,  90. 
AUGMENTATION.    See  GAIN  AND  Loss. 

BANKER,  liable  for  delivering  securities  to  wrong  person,  182. 
BANKRUPT,  is  unfit  to  be  trustee,  7,  8,  16. 
BANKRUPT  TRUSTEE,  not  necessarily  removed,  24. 
BANKRUPTCY  OF  BENEFICIARY,  beneficial  estate  passes  to 
assignee,  158. 

gift  over  on,  valid,  167. 
BANKRUPTCY  OF  TRUSTEE,  does  not  affect  trust  estate,  47. 

discharges  his  liabilities,  155. 
BENEFICIARY,  who  may  be,  157. 

who  is  a,  158. 

person  who  may  receive  income  at  trustee's  pleasure  not, 
79,  158,  166. 

in  spendthrift  trust,  79,  158,  166.. 

his  estate,  159. 

no  claim  on  trust  property,  25,  159. 


198  INDEX 

BENEFICIARY  (continued). 

rights  against  trustee,  168-169. 
enforced  where,  168,  189. 

can  compel  trustee  to  perform  trust,  169. 

interests  not  joint,  159. 

estate  of,  will  descend  like  other  property,  160. 

alienation  of  estate  of,  160. 

restraint  on  alienation  of  estate,  163. 

right  to  possession  of  trust  property,  45,  100,  175. 

not  usually  necessary  parties  to  suit,  26,  75. 

admissions  by,  do  not  bind  trust,  76. 

can  purchase  trust  property,  70. 

cannot  acquire  tax  title,  45,  175. 

cannot  deny  trustee's  title  as  landlord,  45,  175. 

is  not  stockholder  in  corporation,  27. 

expense  of  suit  to  protect,  allowed,  75. 

right  to  support,  75,  83,  173. 

maintenance  and  support  of,  75,  83. 

support  apportioned  where  several,  81. 

right  to  conveyance,  175. 

right  to  information,  91,  171. 

right  to  account,  91. 

right  to  income,  171. 

rights  as  creditor,  170,  178,  181. 

right  to  follow  property,  179. 

must  elect  whether  to  hold  trustee  or  follow  property, 
182. 

stranger  aiding  in  breach  of  trust  liable  to,  182. 

in  possession  of  property  may  sue,  26,  183. 

contracts  with  trustee,  85. 

gifts  to  trustee,  86. 

payment  of  share  to,  before  end  of  trust,  142. 

loss  of  rights,  176,  178. 

no  right  to  advise  trustee,  170. 

may  be  notified  of  proposed  action,  96. 

may  disaffirm  transaction,  177. 

trustee's  liabilities  to,  147. 

may  choose  damages  or  property,  182. 

may  discharge  trustee,  19,  155,  176. 

is  unfit  to  be  trustee,  16. 

liabilities,  184. 

causing  breach  of  trust,  liable,  151,  177,  184. 

liable  for  fraud,  151,  184. 

need  not  refund  payment,  173,  184. 
BENEFIT,  trustee  can  take  none  from  trust,  32. 


INDEX  199 

BETTERMENTS,  not  apportioned,  137. 

charged  to  what,  140. 
BILL  FOR  INSTRUCTIONS,  96. 
BONDS,  when  required  of  trustees,  12. 

refusal  to  give,  cause  for  removal,  23. 

sureties  may  be  required,  12. 

expense  of  surety  company  charged  to  whom,  35. 

amount  required,  13. 

sureties  on  executor's  bonds  liable  for  his  acts  as  trustee,  14. 

liable  for  co- trustee  if  joint  bond  given,  149. 
BONDS,  AS  INVESTMENTS,   114. 

care  of,  104. 

purchase  of  bonds  at  discount  to  balance  ones  at  premium 
improper,  136. 

railroad  bonds  not  real  securities,  112. 

not  mortgage  bonds,  112. 

selling  at  premium,  need  not  be  converted,  107,  111. 

interest  apportioned  when,  136. 
BONDSMEN.  .See  SUBETIES. 
BONUS.    See  COMMISSION. 

BOOKS  OF  ACCOUNT,  open  to  beneficiaries'  inspection,  91. 
BREACH  OF  TRUST,  is  cause  for  removal,  23. 

but  not  if  merely  technical,  24. 

or  accidental,  24. 

stranger  aiding  in,  liable,  182. 

liability  for,  joint  and  several,  147. 

damages  for,  154. 

contribution  among  those  liable,  148. 

beneficiary  may  elect  to  follow  property  or  trustee,  182. 

remedy  for,  lost  how,  176. 

loss  by  breach  falls  on  principal,  123. 
BROKER,  commissions  charged  to  trust  fund,  35. 

commissions  as  between  principal  and  income,  142. 

rule  as  to  employing  self  as,  34. 

trustee  may  be  for  beneficiary,  90. 
BUILDING,  with  personal  property,  conversion,  108. 
BUILDING  LEASES,  74. 

BUSINESS,  of  testator  carried  on  sometimes,  112. 
BUSINESS  RISKS,  should  be  converted,  105. 

CAPABLE.    See  INCAPABLE. 

trustee  should  be,  16. 

court  will  appoint  only  capable  trustee,  18. 
CAPITAL.    See  PRINCIPAL  AND  INCOME. 
CAPRICE,  is  not  discretion,  61. 


200  INDEX 

CAPRICE  OF  BENEFICIARY,  trustee  not  removed  for,  24. 

CAPRICIOUS  TRUSTS,  trusts  for  animals,  157. 

CARE  OF  TRUST  PROPERTY.     See  CUSTODY. 

CESSER,  gift  over  of  beneficiaries'  estate  on  condition  valid, 

166. 

CESTUI  QUE  TRUST.    See  BENEFICIARY. 
CHANGE  OF  INVESTMENTS,  when  made,  111. 
CHARGES,  trustee's  lien  for,  145. 

See  EXPENSES. 
CHATTELS,  not  converted  when,  102,  107,  125. 

who  has  right  to  possession  of,  102,  125,  175. 
CHECKS,  who  may  draw,  103. 
CHILD,  support  of,  where  parent  living,  84. 

payment  to  father  for,  84,  85,  144,  152. 
CHOSE  IN  ACTION,  should  notify  obligor,  101. 

effect  of  notice.    See  NOTICE. 
CLAIM,  trustee  cannot  buy  up,  34. 

beneficiary  cannot  buy  up,  45,  175. 

beneficiary  has  none  to  trust  property,  25,  159. 

but  may  follow  it  in  hands  of  stranger,  179. 
CLERK,  expense  of  charged  to  whom,  35. 
COLLECTION,  from  debtor  to  trust  and  self,  apportioned,  87. 
COLLECTION  OF  ASSETS,  98,  101,  147. 
COMMISSIONS.    See  COMPENSATION. 

what  are  allowed,  37. 

from  what  fund  paid,  37. 

on  termination  of  trust,  38,  145. 

trustee  can  take  no  commission  from  strangers,  37. 

must  account  for  any  received,  32,  35. 
COMPENSATION,  rule  as  to,  for  expert  services,  34. 

trustee  entitled  to  what,  36. 

extra  on  principal,  37. 

for  distribution  of  estate,  38,  145. 

rules  for  various  States,  39-44. 

trustee's  lien  for,  145. 

COMPETITION,  trustee  cannot  come  in,  34,  87. 
COMPLETION  OF  DUTIES,  discharges  trustee,  19. 
COMPOUND  INTEREST,  charged  when,  110,  154,  170. 
COMPROMISE  OF  SUIT,  when  proper,  76,  88. 
CONDITION,  on  which  income  to  cease  valid,  166. 

power  dependent  on,  58. 

purchaser  must  see  that  condition  fulfilled,  70. 
CONFLICT  OF    LAWS.    See  INTEB-STATE  LAW. 
CONSENT,  of  beneficiaries,  discharges  trustee,  19. 

of  beneficiary  as  a  condition,  58. 


INDEX  201 

CONSIDERATION,  must  be  returned  where  sale  disaffirmed, 

170-171. 

CONTINGENT  INTEREST,  sufficient  to  intervene  in  appoint- 
ment of  trustee,  158. 

CONTINGENT  REMAINDER,  sale  of,  67. 
CONTRACT,  to  what  extent  the  trustee  can  bind  the  estate,  77. 

trustee  binds  himself  personally,  28,  77,  145. 

signing  as  "  trustee  "  makes  no  difference,  28,  77,  145. 

for  sale  not  specifically  enforced  when  breach  of  trust,  70. 

but  trustee  liable  for  breach  of,  at  law,  70. 

as  to  compensation  valid,  36. 

between  trustee  and  beneficiary,  36,  85,  86. 

with  beneficiary  may  be  set  aside,  86. 

how  trust  estate  is  bound,  78. 

CONTRIBUTION  FOR  MAKING  GOOD  BREACH  OF  TRUST, 
from  co-trustee,  151. 

from  beneficiary,  151,  177,  184. 
CONVERSION  OF   FUND,   apportionment  between  principal 

and  income,  122-123. 

CONVERSION   OF    REAL   INTO    PERSONAL   PROPERTY, 
improper,  107. 

of  real  into  personal  may  be  authorized  by  court,  108. 

of  infant's  estate,  109. 

on  cy  prds  doctrine,  67,  109. 

implied  authority,  109. 

CONVERSION  OF  SECURITIES,  into  trust  investments,  105 
et  seq. 

equitable  conversion,  122. 

not  of  testator's  good  investments,  106. 

none  of  property  meant  to  be  enjoyed  in  specie,  107. 

securities  at  premium  not  necessarily  converted,  107. 
CONVEYANCE,  by  one  trustee  void,  45. 

beneficiaries'  right  to,  175. 

CONVEYANCE  BY  TRUSTEE,  what  title  passes  to  volunteer, 
46. 

to  purchaser  for  value,  46. 

to  assignee,  47. 

on  execution,  48. 

to  successor,  52. 

to  remainderman,  50,  145. 
CONVEYANCE  TO  REMAINDERMEN,  necessary  when,  145. 

right  of  beneficiary  to,  175. 
CORPORATION,  may  be  a  trustee,  15. 

trusts  for,  157. 

liability  for  transfers  of  stock,  182. 


202  INDEX 

CORPORATION  ( continued ) . 

trustee  is  stockholder  in,  27. 

beneficiary  is  not,  27. 

trustee  liable  as  stockholder,  27. 
COSTS,  when  allowed,  35,  75,  98,  142. 
CO-TRUSTEE,  cannot  delegate  trust  to,  88. 

liability  for  acts  of,  148. 

contribution  from,  151. 
COUNSEL,  expenses  charged  to  trust  fund,  35. 

rule  as  to  employing  self  as,  34,  57,  90. 

trustee  may  be  for  beneficiary,  90. 

advice  of,  does  not  excuse  mistake,  142,  143. 
COUNTER  CLAIM.    See  SET-OFF. 
COURT.    See  also  PBOBATE  COUBTS  and  INTEB-STATE  LAW. 

power  to  appoint  trustee  when,  7. 

what  court  has  jurisdiction  to  remove  trustee,  22,  191. 

will  remove  trustee  when,  22. 

will  not  remove  when,  23. 

may  itself  administer  trust,  7. 

may  exercise  its  discretion  in  removing  a  trustee,  22. 

will  appoint  trustees  when,  9,  191. 

what  court  has  jurisdiction  of  the  trust,  9,  188,  189,  192. 

what  court  has  jurisdiction  to  appoint  trustees,  9,  188,  189. 

will  instruct  trustee  when,  96. 

may  order  sale  of  trust  property,  68. 

controls  execution  of  powers  when,  59-62. 
COVENANTS,  trustee  liable  on  in  lease,  29,  75,  146. 

or  deed,  29,  146. 

CREATOR  OF  TRUST.    See  SETTLOR. 
CREDITOR,  beneficiary's  rights  as,  170,  178,  181. 
CREDITOR  OF  BENEFICIARY,  his  rights  against  equitable 
estate,  162,  163  et  seq. 

may  set  off  debt  in  equity,  49. 

of  beneficiary  in  spendthrift  trust,  166  et  seq. 

of  person  exercising  general  power  of  appointment  takes,  162. 
CREDITOR  OF  TRUST,  remedy  against  trustee,  28,  77. 

remedy  against  trust  property,  48,  78. 
CRIMINAL  LIABILITY,  for  nuisance  on  trust  property,  30. 

for  taking  trust  funds,  147. 
CURTESY  IN  TRUST  ESTATE,  51. 

in  equitable  estate,  160. 

CUSTODY  OF  TRUST  PROPERTY,  degree  of  care  required, 
105. 

cannot  give  to  co-trustee,  149. 

of  non-negotiable  securities,  104. 


INDEX  203 

CUSTODY  OF   TRUST   PROPERTY  (continued). 

of  negotiable  securities,  104,  105. 

of  trust  chattels,  45,  100,  175. 
CY  PRES  DOCTRINE,  sale  under,  67. 

conversion  under,  109. 

DAMAGES  FOR  BREACH  OF  TRUST,  measure  of,  154. 

usually  amount  of  loss  and  interest,  154. 

sometimes  replace  property  and  earnings,  154. 
DAMAGES  RECOVERED,  not  apportioned,  123. 
DEATH  OF  HOLDER  OF  POWER,  destroys  power,  64. 
DEATH  OF  TRUSTEE,  new  trustee  may  be  appointed,  7. 

what  become  of  office  and  title,  3,  20,  61,  52. 

office  and  titla  pass  to  survivor,  20. 

ends  trusteeship,  20. 

liability  ends  at,  147,  155. 
DEATH  OF  SOLE  TRUSTEE,  title  passes  to  whom,  2,  20,  51. 

how  title  passes  to  successor,  50. 

DEBT,  collected  from  individual  and  trust  debtor  apportioned, 
87. 

what  can  be  set  off,  49. 

DEBTOR,  trustee  cannot  convert  himself  into,  147,  180. 
DECLINE.    See  DISCLAIMED 
DECREE,  of  sale  must  conform  to  statute,  66. 

appointing  trustee  should  order  transfer  of  title,  11. 
DEED,  trustee  is  liable  on  covenants,  29,  146. 

when  liable  on  recitals,  146. 
DEFEND,  general  power  to  defend  actions,  75. 
DELAY,  trustee  liable  for  delay  in  investing,  106. 

in  converting,  106. 

beneficiary  may  lose  rights  by,  177-178. 
DELAYED  DIVIDENDS,  135. 
DELEGATE,  cannot  delegate  trust,  88. 

trustee  cannot  delegate  powers,  57,  90. 

ministerial  acts  may  be  delegated,  57,  89,  90. 

may  employ  agent  where  there  is  necessity,  90. 
DEMAND,  of  one  trustee  sufficient,  76. 

DEPRECIATION  OF  PROPERTY,  after  payment  of  one  bene- 
ficiary, 143. 

generally  loss  of  principal,  124,  136. 
DESCENT,  of  equitable  estate,  160. 

of  legal  estate,  51. 
DEVESTMENT  OF  OFFICE,  by  trust  ending,  19. 

by  death  of  trustee,  19. 

by  resignation,  20. 

by  removal,  22. 


204  INDEX 

DEVISE,  of  equitable  estate,  160. 

of  legal  estate,  51. 
DILIGENCE,  necessary,  89,  101,  106. 

amount  required,  106,  113,  152. 
DIRECTOR,  trustee  is  eligible  as  stockholder  in  corporation,  27. 

beneficiary  is  not,  27. 

DISABILITY  OF  TRUSTEE,  effect  of,  19. 
DISAFFIRM,  beneficiary  can  disaffirm  transaction  where  mis- 
led, 85,  86,  177. 

can  disaffirm  sale  by  trustee  to  self,  32,  70. 
DISAGREEMENT,  of  one  trustee  blocks  all  action,  55. 

with  other  trustees,  if  unreasonable,  cause  for  removal,  23. 

with  beneficiary,  not  cause  for  trustee's  removal,  24. 
DISBARMENT,  defaulting  trustee  liable  to,  147. 
DISCHARGE  OF  ENCUMBRANCE,  cost  apportioned,  137. 
DISCHARGE  OF  TRUSTEE,  by  end  of  trust,  19. 

by  beneficiary,  19,  176. 

in  various  ways,  19,  155,  176. 

by  bankruptcy,  129. 

See  DEVESTMENT  OF  OFFICE. 
DISCLAIMER,  trust  may  be  refused,  3. 

whole  trust  must  be  refused,  4. 

if  one  of  several  trusts  in  same  instrument,  4. 

heir  or  representative  of  deceased  trustee  cannot  always 
disclaim,  3. 

form  of,  3. 

how  made,  4. 

by  refusing  to  give  bond,  4. 

effect  of,  5. 
DISCOUNT,  trustee  cannot  profit  by,  34. 

bond  purchased  at  discount  does  not  balance  one  at  pre- 
mium, 136. 
DISCRETION,  court  may  exercise  in  removing  trustee,  22. 

honest  exercise  of,  not  cause  of  removal,  24,  62. 

unreasonable  or  prejudiced  exercise  is  cause  for  removal, 
23. 

personal  exercise  of,  essential  to  execution  of  power,  55. 

cannot  be  exercised  by  any  one  but  trustee,  56,  57,  58. 

cannot  be  delegated  to  agent  or  co-trustee,  57. 

cannot  be  exercised  by  court,  61. 

controlled  by  court  when,  59,  60. 

amount  required  in  investing,  116. 

in  managing  trust,  152. 

what  is  sound  in  investing,  112-117. 

"in  his  discretion"  means  little,  112. 


INDEX  205 

DISCRETION  (continued). 

of  trustee  as  to  support  of  beneficiary,  81,  85. 

in  spendthrift  trusts,  166. 

as  to  support  of  family,  167. 

DISCRETIONARY  POWERS,  execution  not  controlled  by  the 
court,  60-63. 

reasons  for  execution  need  not  be  given,  61. 

not  liable  for  use  of,  153. 

execution  set  aside  for  fraud,  63. 

paying  whole  fund  fraud,  63,  82. 
DISSEISOR,  trustee  may  be,  160. 

of  property  is  not  a  trustee,  179. 
DISTRIBUTION,  of  trust  fund  at  trustee's  risk,  142. 

payment  of  shares  at  different  times,  143. 

may  have  decree  for,  143. 

by  fictitious  account  improper,  144. 

compensation  for,  145. 

conveyance  to  remainderman  necessary  when,  145. 
DIVIDENDS,  ordinary  are  income,  126,  135. 

delayed,  135. 

on  wasting  investments,  126. 

extra  or  stock  belong  to  whom,  127-134. 

not  apportioned,  126. 
DIVISION  OF  TRUST,  cannot  disclaim  part,  4. 

cannot  accept  part,  6. 

payment  of  part,  143. 
DOWER,  in  trust  estate,  51. 

in  equitable  estate,  143. 
DRUNKARD,  unfit  trustee,  16. 

may  be  removed  from  office,  23. 
DUTY,  neglect  of.    See  NEGLECT. 

ignorance  of,  no  excuse,  96,  152. 

where  trustee  is  in  doubt,  may  notify  beneficiary  of  in- 
tended action,  96. 

may  get  instructions  of  court,  96. 

to  exercise  utmost  good  faith,  2,  86. 

not  to  aid  adverse  claimants,  87. 

not  to  come  in  competition,  87. 

is  all  to  the  trust,  87. 

to  exercise  the  trust  personally,  2,  85,  88. 

to  examine  trust  property  and  documents,  1,  83,  98. 

to  examine  predecessor's  accounts,  98,  147. 

to  take  possession  of  property,  98. 

to  convert  into  trust  investments,  105. 

to  invest,  109. 


206  INDEX 

DUTY  (continued). 

in  investing  is  what,  111. 

as  to  class  of  investments,  111-124. 

as  to  testator's  business,  106. 

to  keep  accounts,  91. 

to  prosecute  suits,  88. 

to  support  beneficiary,  83. 

to  repair,  102. 

to  fence,  102. 

to  insure,  102,  147. 

to  pay  taxes,  102. 

EFFECT,  of  disclaimer,  5. 

ELECT,  beneficiary  may  elect  to  pursue  property  or  trustee,  182. 

may  elect  damages  or  property,  154. 
EMBEZZLEMENT,  147. 

EMPLOYMENT,  of  a  person  is  not  trust  property,  98. 
ENCUMBRANCE,  discharge  of  apportioned,  137. 
END,  trusteeship  how  ended,  19,  176. 

of  trust  discharges  trustee,  19. 
ENFORCED,  trust  may  be  where,  188,  189. 
EQUITABLE  ESTATE,  25,  158,  159. 

See  ESTATE  OF  BENEFICIABY. 
EQUITABLE  CONVERSION,  122. 
ERRORS,  liability  for,  151. 
ESCHEAT,  of  equitable  estate,  159. 
ESTATE  OF  BENEFICIARY,  incidents,  159. 

alienation  of,  160-168. 
ESTATE  OF  TRUSTEE,  is  joint,  45. 

cannot  be  severed,  45. 

passes  to  survivor,  46. 

not  affected  by  statutes  making  tenants  in  common,  46. 

in  real  estate  what  is  needed,  44. 

in  personal  property  absolute,  44. 

in  code  States  no  title,  44. 
ESTOPPEL,  by  receipting  for  securities,  100. 

by  laches,  177-178. 
EXCHANGE,  power  to,  73. 
EXECUTION,  of  power  must  be  accurate,  58. 

levy  of  does  not  affect  trust  estate,  48. 

trust  property  may  be  taken  for  trust  debts,  48. 

equitable  estate  may  be  taken  on,  161. 
EXECUTOR,  may  be  a  trustee  in  fact,  6,  14. 

liability  of  bondsmen  for  acts  as  trustee,  6,  13,  note  1. 

when  he  becomes  a  trustee,  14,  100. 


INDEX  207 

EXECUTOR  (continued). 

ends  executorship  and  becomes  trustee  how,  100. 

need  not  accept  trusts  in  same  will,  4,  6. 
EXECUTOR  OF  TRUSTEE,  may  inherit  trust,  3. 

does  not  take  trust  powers,  54. 

duty  as  to  trust  estate,  54. 

power  to  disclaim  testator's  trusts,  3,  6,  20. 

his  duty  as  to  testator's  trusts,  20. 
EXECUTORY  DEVISE,  sale  of,  67. 
EXEMPTION,  from  furnishing  sureties  on  bond,  12,  13. 

from  liability  by  settlement,  153. 
EXPENSES,  what  are  chargeable  to  income  and  principal,  137.  • 

what  may  be  charged  to  trust  fund,  35. 

of  suit  allowed,  35,  75. 

of  accounting,  36,  95. 

of  protecting  beneficiary,  75. 
EXTINCTION  OF  POWER,  64. 
EXTINCTION  OF  TRUST,  discharges  trustee,  19. 
See  END  OF  TRUST. 

FARMING  IMPLEMENTS,  may  be  used  by  whom,  102, 125, 175. 

See  CHATTELS. 
FARMING  STOCK,  increase  usually  income,  125. 

See  PEBSONAL  PBOPEBTT. 
FATHER.    See  PABENT. 
FENCE,  duty  to,  102. 

cost  charged  to  what,  138. 
FIT.    See  UNFIT. 

a  trustee  should  be  fit,  16. 

court  ordinarily  will  only  appoint  a  fit  trustee,  17. 
FOLLOWING,  the  trust  property  into  hands  of  stranger,  179- 

182. 

FOREIGN  INVESTMENTS,  115,  193. 

FOREIGN   REAL  ESTATE,   ancillary   trusteeship  necessary, 
188,  192. 

need  not  be  inventoried,  92,  192. 

rents  from,  not  part  of  account,  92,  192. 
FOREIGN  SECURITIES,  improper  investments,  115,  192. 
FOREIGN  TRUSTEE,  appointment  of,  18,  192. 

removal  of,  24,  191. 
FORFEITURE  of  trustee's  estate,  effect  of,  51. 

of  equitable  estates,  160. 
FRAUD,  in  account,  95,  149. 

to  draw  whole  fund  at  once  under  power  to  use  principal  if 
needed,  63,  80. 


208  INDEX 

FRAUD  (continued). 

what  is  in  sale,  70. 

in  contract  between  trustee  and  beneficiary,  use  of  position 
is  fraud,  85. 

presumption  of  fraud  if  trustee  gets  any  advantage,  85. 

in  execution  of  power,  63. 

beneficiary  liable  for,  151,  184. 

may  be  forced  to  contribute,  151. 

contribution  among  parties  to,  151. 
FURNITURE,  may  be  used  up  when,  102,  125,  176. 

replaced  from  income,  125. 

See  CHATTELS. 

GAIN  AND  LOSS,  usually  principal,  124. 

on  separate  transactions  not  set  off,  124,  136,  147,  153. 
GENERAL  ASSIGNMENT.    See  ASSIGNMENT. 
GIFTS,  to  trustee,  35,  86. 

GOOD  FAITH,  required  of  trustee,  2,  32,  85,  87. 
GRAVEL,  when  income,  125. 
GUARDIAN,  of  lunatic  or  infant  trustee,  15,  20. 

payment  to  guardian,  144. 

expenses  allowed,  35. 

HEIR  OF  TRUSTEE,  may  have  title  to  trust  estate,  3,  48. 

does  not  take  trustee's  powers,  54. 
HONESTY,  protects  when,  142,  151. 

not  enough  alone,  142,  151,  152. 
HOUSE,  beneficiaries'  right  to  use,  176. 

for  beneficiary  proper  investment,  112. 
HUSBAND,  not  proper  trustee  for  wife,  17. 

may  be  trustee  for  wife,  16. 

IGNORANCE,  court  will  instruct  when,  96. 

of  duties,  no  excuse,  151. 

ILLEGAL  TRUST,  cannot  be  enforced,  169,  187. 
IMPLEMENTS,  may  be  used  by  whom,  125. 

See  CHATTELS. 

INCAPABLE  TRUSTEE,  when  new  trustee  in  place  of,  8,  9. 
INCIDENTS,  of  legal  estate,  25. 

of  beneficial  estate,  159. 

of  ownership  fall  to  trustee,  26. 
INCOME.     See  PRINCIPAL  AND  INCOME. 

first  year's  income,  172. 

investment  should  produce,  111. 

what  is  net,  139,  171,  172. 


INDEX  209 

INCOME  (continued). 

beneficiary's  right  to,  171. 

payable  when,  172. 

commissions  on,  37. 

may  be  withheld  to  reimburse  trustee,  154,  173. 

may  be  on  condition,  166. 

anticipation  of.     See  RESTRAINT  ON  ALIENATION. 

accumulated,  becomes  principal,  126. 

may  be  collected  by  one  trustee,  89. 
INCOMPETENCY,  no  excuse,  142,  151. 
INDEMNITY,  trustee  may  require,  75. 

trustees'  right  to,  from  trust  estate,  30,  31,  35,  78. 
INFANT,  may  be  a  trustee,  15-16. 

infant  trustee  may  be  removed,  16. 

effect  of  infant's  being  trustee,  16. 

no  conversion  in  trust  for,  109. 

right  to  support.    See  SUPPORT. 

payments  to,  84,  144,  152. 

becoming  of  age  should  have  advice,  85,  176-177. 
INFORMATION,  beneficiary  is  entitled  to,  171. 

strangers  not  entitled  to,  146. 

need  not  give  to  stranger  at  beneficiary's  request,  146,  171. 
INJUNCTION,  breach  of  trust  may  be  enjoined,  170. 
INNOCENT  PURCHASER.    See  PURCHASES  FOR  VALUE. 
INSANE  PERSON.    See  LUNATIC. 

right  to  support.    See  SUPPORT. 
INSANITY,  expense  of  suit  to  establish  allowed,  75. 
INSOLVENCY.    See  BANKRUPTCY. 
INSTRUCTIONS,  bill  for,  lies  when,  96. 

should  not  be  sought  by  fictitious  account,  97. 

trustee  may  get  when,  96. 

as  to  distribution,  143. 

necessary  parties,  98. 
INSURANCE,  duty  to  insure,  102. 

liable  for  neglect  of,  148. 

premiums  charged  to  whom,  140. 

proceeds,  apportioned  how,  141. 
INTEREST,  charged,  for  not  investing,  110. 

for  breach  of  trust,  171. 

simple  and  compound,  110,  154,  171. 
INTEREST  ON  INVESTMENTS,  apportioned  when,  136. 

on  bonds  bought  at  premium  apportioned,  136. 
INTERESTED,  who  are,  158. 

persons  having  possibility  not,  158. 

holders  of  general  power  of  appointment  not,  158. 


210  INDEX 

INTERESTED  (continued). 

person  who  may  receive  income  at  trustee's  pleasure  not, 
166. 

potential  payee  in  spendthrift  trust,  79,  158,  166. 

person  may  have  trustee  appointed,  169. 
INTER-STATE  LAW,  186-193. 
INVALID  TRUSTS,  169,  187. 
INVESTMENT,  duty  to  make,  109. 

sound  discretion  must  be  used  in,  116. 

in  discretion  of  trustee  means  what,  112. 

soundness  determined  by  facts  at  time  of  investing,  116. 

must  produce  income  and  be  safe,  111. 

what  are  proper,  114. 

English  rule,  113. 

American  rule,  113  et  seq. 

improper  ones,  115. 

proportion  in  one  security,  116. 

gain  on  one  does  not  balance  loss  on  another,  124,  136,  147, 
153. 

allowed  in  various  States,  117-121. 

should  be  changed  when,  110-111. 

of  testator,  not  always  to  be  converted,  105,  106. 
IRREGULAR  SALE,  aided  when,  69. 

purchaser  takes  risk  of,  70. 

JOINDER,  of  whom  as  parties,  26,  48,  75. 

JOINT,  execution  of  powers  necessary,  55-56. 

JOINT  BOND,  makes  trustees  liable  for  co-trustee,  149. 

JOINT  TENANTS,  trustees  are,  45. 

beneficiaries  are  not,  159. 
JOINT  TRUSTEES,  survivorship,  45,  51,  54. 

must  exercise  trust  jointly,  54,  55-56. 

liability  joint  and  several,  147. 

must  sue  jointly,  75. 

when  liable  for  co-trustees,  148. 

right  to  contribution,  151,  177,  184. 
JUDGMENT,  trustee  must  use  good,  116,  142,  151,  152. 
JURISDICTION,  what  courts  may  appoint  trustees,  8,  9,  10, 
188-190,  192. 

where  trust  can  be  enforced,  188,  189. 

what  court  may  remove  a  trustee,  22,  191. 

what  court  has  jurisdiction  over  trustee,  8,  22,  189. 

LACHES,  rights  of  beneficiary  lost  by,  177,  178. 
LAND,  VACANT,  should  be  converted,  106. 


INDEX  211 

LAND,  VACANT  (continued). 

proceeds  of  sale  apportioned,  122. 

taxes  on,  charged  to  principal,  139. 

See  REAL  ESTATE. 

LANDLORD,  beneficiary  cannot  deny  trustee's  title  as,  45,  175. 
LEASE,  power  is  general  and  incidental  to  office,  73,  74. 

what  binds  the  estate,  73. 

building  lease,  74. 

trustee  is  liable  on  covenants,  29,  75,  146. 
LEASEHOLDS,  improper  investments,  115. 
LEGAL  ESTATE.    See  ESTATE  OF  TRUSTEE. 
LEGAL  EXPENSES,  charged  to  trust  fund,  35,  75. 
LET.    See  LEASE. 
LIABILITIES,  to  beneficiary,  147-156. 

joint  and  several,  147. 

excused  from,  by  trust  instrument,  153. 

for  acts  of  predecessor,  92,  101,  148-149. 

for  acts  of  co-trustee,  148  et  seq. 

for  not  investing  in  particular  stock,  110,  154. 

for  neglect  of  duty,  109,  148,  149. 

for  allowing  rent  to  fall  in  arrears,  148. 

for  errors,  151. 

for  use  of  discretionary  power,  80,  153. 

for  care  of  securities,  103,  104,  105,  149,  150. 

for  payment  of  share  to  beneficiary,  143. 

for  payment  to  wrong  person,  142,  144. 

for  distribution  of  fund,  142. 

to  strangers,  30,  145. 

trustee  is  liable  as  owner  of  property,  30. 

trustee  is  liable  as  stockholder  in  corporation,  27. 

for  misrepresentations,  100,  146. 

on  contract,  28,  77,  145. 

trustee  liable  on  contract  of  sale  not  enforceable  in  equity, 
70. 

trustee  is  liable  on  covenants  in  deed,  29,  146. 

trustee  on  covenants  in  lease,  29,  75,  146. 

criminally,  146. 

criminal.     See  CBIMINAL  LIABILITY. 

ends  on  death,  147,  155. 

terminated,  20. 
LIABILITIES  OF   BENEFICIARY,  184. 

for  taxes,  184. 

for  fraud,  151,  184. 

inducing  breach  of  trust,  151,  184. 
LIEN,  beneficiaries',  on  trust  property,  179. 


212  INDEX 

LIEN  ( continued ) . 

trustee's  for  expenses,  36. 

trustee's  for  his  charges,  145. 

mechanic's  lien  attaches  when,  49. 

LIFE  TENANT  AND  REMAINDERMAN,  for  respective  rights. 
See  PBINCIPAL  AND  INCOME. 

trustee's  duty  to,  in  investing,  111. 

LIMITATIONS,  if  trustee  barred  by  statute  there  ia  no  rem- 
edy, 27. 

when  statute  runs  for  trustee,  156,  160,  178. 

statute  runs  after  distribution  or  decree  for,  145. 

statute  of,  discharges  trustee's  liabilities,  156. 

statute  runs  for  breach  of  trust  when,  178. 
LOAN,  on  personal  security  not  proper  investment,  116.  • 

cannot  loan  trust  funds  to  self,  33,  147. 

or  to  relative  or  partner,  116. 
LOSS.    See  GAIN  AND  Loss. 

by  breach  of  trust,  principal,  123. 

liability  for,  147,  148. 

of  rights  by  beneficiary,  176,  178. 
LUNATIC,  may  be  a  trustee,  15. 

may  be  removed,  15,  23. 

effect  of  lunatic's  being  trustee,  15. 

expense  of  declaring,  35. 

duty  to,  83. 
LUXURIES,  allowed  when,  81. 

MAINTENANCE,  power  of.    See  SUPPOBT. 
MAKER  OF  TRUST.     See  SETTLOR. 
MANAGEMENT  OF  TRUST  PROPERTY,  98. 

See  TABLE  OF  CONTENTS,  pp.  xiv,  xv,  xvi. 
MANAGING  TRUSTEE,  88-89. 

cannot  exercise  all  powers,  88. 
MARRIED  WOMAN,  status  of,  85. 

settlement  on  self,  167. 

restriction  as  to  income,  174. 
MEASURE  OF  DAMAGES.     See  DAMAGES. 
MECHANIC'S  LIEN,  attaches  to  trust  property  when,  49. 
MINOR.    See  INFANT. 
MISMANAGEMENT,  is  cause  for  removal,  23. 

liability  for.    See  LIABILITIES. 
MISREPRESENTATION,  liability  for,  100,  146. 
MISTAKE,  if  honest,  not  a  cause  for  removal,  24. 

liability  for,  152. 

account  may  be  re-opened  for,  94. 


INDEX  213 

MONEY,  single  trustee  may  collect,  90. 

can  be  followed,  180. 

care  of,  103. 
MORTGAGE  OF  TRUST  PROPERTY,  not  general  power,  71. 

power  implied,  71. 

court  will  not  order,  72. 

power  of  sale  does  not  include,  72. 

power  of  sale  mortgage  implied,  72. 
MORTGAGES,  bonds  may  not  be,  112. 

railroad  bonds  not  investment  in,  112. 

second  not  proper  investment,  116. 

margin  of  security,  116. 
MOTHER.    See  PABENT. 

NEED,  what  is,  80. 

court  will  not  control  discretion  as  to,  80-81. 

drawing  whole  fund  at  once  a  fraud,  63,  80. 
NEGLECT,  to  disclaim  implies  acceptance,  7. 

to  convert,  106. 

to  examine  trust  securities,  89,  104. 

trustee  liable  for,  109,  148,  149. 

to  claim  rights,  estops  beneficiary,  177,  178. 
NEGOTIABLE  SECURITIES,  care  of,  104. 
NET  INCOME,  defined,  139,  171,  172. 

ascertained  when,  172. 
NON-RESIDENT  TRUSTEES.    See  FOREIGN  TRUSTEES. 

may  or  may  not  be  removed,  24,  191. 

will  not  be  appointed  when,  18,  192. 

NOTICE,  to  obligor  of  chose  in  action,  should  be  given  when, 
101. 

of  prior  equity,  required  when,  161,  162. 

effect  on  priorities  in  equitable  estate,  162. 

what  is,  162. 
NOTICE  OF  TRUST,  what  is,  47,  71,  182. 

word  "  trustee,"  47,  182. 

purchaser  with,  179. 
NUISANCE,  trustee  is  liable  for  nuisance  on  trust  property,  31. 

beneficiary  not  liable  for,  184. 

OFFICE,  expense  of,  charged  to  whom,  35. 

OFFICE  OF  TRUSTEE.    See  TRUSTEESHIP. 

ONE  TRUSTEE.    See  SINGLE  TRUSTEE. 

OWNERSHIP  of  trust  property  belongs  to  trustee,  25,  158,  159. 

of  trust  property  does  not  belong  to  beneficiary,  25. 

in  equity,  considered  to  be  in  beneficiary,  158,  159. 


214  INDEX 

OWNERSHIP  (continued). 

incidents  of,  fall  to  trustee,  26. 
not  beneficial  to  trustee,  32-35. 

PARENT,  is  unfit  trustee,  16. 

duty  to  support  child,  84. 

support  of  child  may  include  parent,  79,  84. 

payment  to,  for  child,  84,  85-,  144,  152. 

to  account,  92,  94,  95,  143. 
PARTIES  TO   SUIT,  who  are  necessary,  75. 

beneficiaries  generally  not  necessary  parties,  26. 

are  sometimes,  26. 

to  suit  for  removal,  22. 

to  suit  for  appointment  of  trustee,  9. 

to  bill  for  instructions,  98. 

to  decree  of  distribution,  143,  144. 
PARTITION,  estate  of  trustees  is  not  subject  to,  45-46. 

power  to,  73. 
PARTNERSHIP,  improper  investment,  115. 

should  be  converted,  106,  112. 

may  be  authorized  investment,  112. 

profits  partly  principal  when,  123. 
PASSIVE  TRUSTEE,  duty  of,  45. 

none  recognized  by  law,  88. 
PAYMENT,  by  debtor,  to  single  trustee,  89,  90. 

of  share  to  beneficiary  before  end  of  trust,  143. 

by  mistake,  beneficiary  not  required  to  refund,  184. 

to  infant,  84,  85,  144,  152. 

to  attorney,  144. 

to  wrong  person,  144,  152. 

to  wrong  person,  beneficiary  may  recover,  152. 
PERSONAL,  a  trust  is  a  personal  confidence,  88. 
PERSONAL  LIABILITY.    See  LIABILITY. 
PERSONAL   PROPERTY,  conversion  into  real,  107. 

not  converted  when  meant  to  be  enjoyed  in  specie,  107,  125, 
175,  176. 

taking  possession  of,  99-102. 

who  entitled  to  possession,  45,  103,  107,  125,  175,  176. 
PERSONAL     REPRESENTATIVES    OF     SOLE     TRUSTEE, 
cannot  disclaim  decedent's  trusts,  3,  20. 

of  deceased  trustee  may  be  invested  with  trust  estate,  3, 
20,  51-52. 

of  deceased  trustee  does  not  succeed  to  trust  powers,  20,  54. 

of  deceased  trustee,  duty  as  to  trust  estate,  20,  54. 
PERSONS,  who  are  beneficially  interested.     See  INTEBESTED. 
PLEDGE.    See  MORTGAGE. 


INDEX  215 

POSSESSION,  of  beneficiary  is  that  of  trustee,  45,  188. 
POSSESSION  OF  PERSONAL  PROPERTY, 

the  taking  of,  100-102. 

who  has  right-  to,  45,  103,  175. 
POSSESSION  OF  REAL  ESTATE,  taken  how,  99,  100. 

who  has  right  to,  45,  175. 

POSSESSION   OF   TRUST   PROPERTY,   trustee   is   entitled 
to  at  law,  45. 

beneficiary  may  be  entitled  to  in  equity,  45, 102,  107, 125, 175. 

should  be  taken  at  once,  98-102. 

POSSIBLE  PAYEE,  interested  in  appointment  of  trustee,  11, 
79,  169. 

but  has  no  interest  in  trust,  79,  158,  166. 
POVERTY  OF  TRUSTEE,  not  always  cause  for  removal,  24. 
POWER    OF    APPOINTMENT,  •  holder    of    is    not    a    benefi- 
ciary, 158. 

if  general  power  exercised  creditors  of  holder  take,  162. 

otherwise  where  power  is  special,  162-163. 

who  administers  estate  where  general  or  special,  14-15. 
POWER  OF  ATTORNEY,  payment  on  invalid  power,  144. 

trustee  cannot  give  a  general  one,  57,  89. 

may  give  special  power,  57,  89. 
POWERS,  general  principles,  52. 

incidental  to  the  office  of  trustee,  52—53. 

the  court  can  grant,  53. 

the  legislature  can  grant,  53. 

specially  given  by  the  instrument,  53-54. 

general  and  special,  vesting  when  and  when  not,  54. 

must  be  exercised  by  all  jointly,  54,  55,  56. 

when  lost  by  disclaimer  of  one  trustee,  5. 

exercise  of  discretion  is  essential  part  of,  55. 

execution  must  be  joint,  55,  56. 

exception  as  to  collecting  money,  56. 

to  act  by  agent  or  attorney,  56-57. 

execution  must  be  exact,  58. 

partial  execution  may  not  exhaust,  58. 

but  may  sometimes,  64. 

defective  execution  aided  for  purchaser,  58. 

defective  sale  confirmed,  69. 

substantial  execution  aided,  58. 

literal  execution  necessary  when,  58. 

court  controls  execution  when,  59. 

execution  set  aside  for  fraud,  63. 

of  single  trustee,  89. 

pass  to  successors,  54. 


216  INDEX 

POWERS  (continued). 

and  survivors  when,  54. 

of  sole  trustee,  vest  in  successor,  not  in  heirs,  54. 

fraud  in  execution  of,  63. 

exhausted  how,  64. 

extinction  of,  64. 

cease  when  trust  is  accomplished,  64. 

liability  for  exceeding,   151-152. 

not  liable  for  use  of  discretionary,  153. 

of  sale  are  not  incidental,  53,  64. 

of  sale,  64.    See  SALE. 

of  support,  79-82. 

to  contract,  77-78. 

of  compromise,  76. 

of  revocation,  82. 

of  arbitration,  76. 

to  lease,  73-75. 

of  partition,  73. 

to  mortgage  or  pledge,  71-72. 

of  exchange,  73. 

to  convert  real  into  personal  property,  etc.,  108. 

to  appoint  new  trustee  when,  8-9. 

to  appoint  trustee,  in  whom,  9,  14. 
PREJUDICED  TRUSTEE,  may  be  removed,  23. 
PREMIUM  ON  BOND,  reduced  by  sinking  fund,  136. 

bond  selling  at,  not  necessarily  converted,  107. 

purchase  of  bonds   selling  at  premium  and   discount  to 

balance  improper,  136. 
PREMIUMS.    See  INSURANCE. 
PRINCIPAL  AND   INCOME,  what  is,  121-142. 

importance  of  distinguishing,  121. 

gain  and  loss  on  securities,  124-127. 

discharge  of  encumbrance,  137. 

accumulated  income,  126. 

timber  and  gravel  are  what,  125. 

farming  stock,  125. 

dividends  are  what,  126,  135. 

extra  dividends,  127-134. 

stock  dividends,  128-129. 

interest  apportioned  when,  136. 

interest  on  bonds  bought  at  premium,  136. 

repairs,  138. 

alterations  and  additions,  138. 

betterments,  140. 

taxes,  139. 


INDEX  217 

PRINCIPAL  AND   INCOME  (continued). 

insurance,  140. 

expenses,  141. 

brokers'  charges,  142. 

legal  expenses,  142. 

support  of  beneficiary,  79,  83. 

apportionment  on  conversion,  123. 

apportionment  at  end  of  life  estate,  123. 

right  of  single  trustee  to  handle,  56,  89,  103. 
PRIORITY,  among  transferees  of  equitable  estate,  161-162. 
PROBATE    COURTS,   proper    place   to    file    disclaimer    under 
will,  4. 

appointment  of  trustee  under  will,  8. 

PROFIT,  trustee  cannot  make  profit  from  trust,  2,  32-35. 
PROMISE,  to  accept  trust  not  binding,  3. 
PROPERTY,  trustee  should  examine,  2,  98,  99. 

what  may  be  trust  property,  98. 

vests  in  trustee  how,  11,  99,  100. 

the  trustee's  estate  in,  44. 

ownership  of  trust  property  belongs  to  trustee  not  bene- 
ficiary, 25. 

beneficiary  has  no  claim  on,  158. 

may  follow  into  hands  of  stranger,  179. 

unproductive  should  be  converted,  106-107. 

but  not  property  to  be  used  in  specie,  107. 

beneficiary's  right  to  possession  of,  45,  102,  107,  125,  175. 

beneficiary's  right  to  conveyance  of,  173-175. 

passes  to  successor  how,  50. 

passes  to  remainderman  how,  50. 

trustee  cannot  take  any  benefit  from,  32-35. 

trustee  cannot  use  trust  property,  32. 

trustee  cannot  purchase  trust  property,  32,  70,  155. 

care  and  custody  of,  102. 

of  trust  may  be  taken  for  trust  debts,  48-49. 

replaced  when,  154. 

PURCHASE  MONEY,  purchaser  must  see  to  when,  71. 
PURCHASER,  trustee  cannot  buy  trust  property,  32,  70,  155. 

from  beneficiary,  rights  of,  161. 

must  see  to  application  of  purchase  money  when,  71. 

takes  risks  of  irregularity,  70. 
PURCHASER  FOR  VALUE  WITHOUT  NOTICE,  46,  182. 

who  is  and  who  is  not,  46-47. 

REAL  ESTATE,  trustee  takes  only  necessary  title  in,  44. 
title  should  stand  in  joint  names,  45. 


218  INDEX 

REAL   ESTATE   (continued). 

who  entitled  to  possession,  45,  175. 

taking  possession  of,  99-100. 

unproductive,  improper  investment,  116. 

unproductive,  should  be  converted,  106. 

duty  to  improve,  102. 

care  and  custody  of,  102. 

repairs  charged  to  what,  138. 

alterations  and  additions  charged  to  principal,  138. 

conversion  into  personal,  107-109. 

foreign,  92,  188,  189,  192,  193. 
REAL  SECURITIES,  what  are,  112. 

railroad  bonds  not,  112. 
RECEIPT,  must  be  joint  in  equity,  56. 

of  one  trustee,  sufficient  when,  56. 

trustee  bound  by  when,  100. 

liability  for  joining  in,  149. 
RECEIVER,  appointed  when,  9,  170. 
RECORD,  deed  should  be  recorded,  99,  188. 
RECOUP,  when  trustee  can,  154,  173. 
REFUND,  beneficiary  need  not,  184. 

beneficiary  disaffirming  sale  must  refund  consideration,  70, 

170-171. 

REFUSAL  OF  TRUST.     See  DISCLAIMER. 
REGISTERING  BONDS,  when  proper,  104-105. 
REGULARITY   OF    TRUSTEE'S    APPOINTMENT,  not  ques- 
tioned when,  19. 
REIMBURSEMENT,  35-36. 

for  damages  in  suit,  29. 

for  expenses  of  suit,  35,  75. 

for  expenses  of  accounting,  36,  95. 

for  payment  to  beneficiary,  154,  173. 
RELATION,  is  not  a  fit  trustee,  16-17. 
RELATIONSHIP,  between  trustee  and  beneficiary,  2,  3,  85. 
RELEASE,  discharges  liabilities,  155. 

by  beneficiary,  176. 
REMAINDERMAN,  title  vests  in  without  conveyance,  50. 

conveyance  to  when,  145. 
REMOVAL,  is  in  discretion  of  court,  22. 

will  remove  for  what,  23. 

will  not  remove  for  what,  24. 

of  absentee  trustee,  23,  194. 

lunatic  trustee  may  be  removed,  16. 

infant  trustee  may  be  removed,  16. 
RENT,  is  income,  136. 


INDEX  219 

RENT  (continued). 

apportioned  when,  136. 

liability  for  allowing  to  fall  in  arrears,  147. 
REPAIR,  duty  to,  102. 
REPAIRS,  charged  to  what,  138. 
REPRESENTATION,  of  one  trustee  not  binding,  76. 

liability  for  misrepresentation,  100,  145. 
RESIGNATION,  21. 

must  be  accepted  by  all,  21. 

or  by  the  court,  21. 

must  resign  whole  trust,  21. 

may  resign  independent  trusts  under  same  instrument,  22. 

responsible  in  what  court,  8,  154. 
RESTRAINT,  on  alienation,  163. 

valid  in  some  States,  164-166. 

not  valid  in  others,  164-166. 

married  women,  114. 

by  spendthrift  trust,  166. 

RETIREMENT  OF  TRUSTEE.    See  DEVESTMENT  OF  OFFICE. 
REVOCATION,  power  of  inserted  in  settlement  in  England  not 
in  America,  82. 

by  using  discretion  to  draw  whole  fund  fraud,  63,  80. 

SAFETY,  a  necessary  feature  of  investment,  111. 

SALE,  of  contingent  remainders  and  executory  devises,  67. 

power  of  not  incidental  to  office,  64-65. 

power  usually  specially  given,  65. 

power  of,  implied  from  a  given  duty,  65-66. 

power  under  statutes,  66. 

under  cy  pres  doctrine,  67. 

may  be  ordered  by  special  law,  67. 

by  order  of  court,  68. 

management  of,  68-69. 

irregular,  69. 

purchaser  takes  risk  of  regularity  of,  70. 

purchaser's  responsibility  for  purchase  money,  70-71. 

unauthorized,  confirmed  when,  68. 

trustee  cannot  purchase  at,  32,  70,  155. 

beneficiary  may  purchase,  70. 

cannot  sell  to  relative  or  partner,  32. 

to  trustee,  damages,  155. 

disaffirmed,  consideration  must  be  returned,  70,  170. 
SECURITIES,  duty  to  convert  into  trust  investments,  105. 

right  to  possession  of,  175. 

beneficiary  may  examine,  171. 


220  INDEX 

SECURITIES  (continued). 

care  of  negotiable  and  non-negotiable,  104. 

must  not  release,  88. 
SERVICES.    See  COMPENSATION. 

SET   OFF,  trustee  cannot  set  off  private  debts  against  credi- 
tor of  trust,  32. 

by  whom  and  when,  49. 

trustees'  set  off  against  beneficiary,  161,  188. 
SETTLEMENT,  should  examine,  1,  2,  83,  98,  99. 

on  self,  peculiarities  of;  167,  168. 
SETTLOR,  may  appoint  unfit  trustee,  18. 

cannot  restrain  self  from  alienation,  167. 
SIGNATURE  "  AS  TRUSTEE,"  effect  of,  28,  78,  146. 
SINGLE  TRUSTEE,  may  do  what  alone,  89,  90. 

may  collect  money,  56,  89,  103. 

may  handle  income,  not  principal,  89,  103. 

may  be  entrusted  with  securities  when,  103,  104-105. 

representation  of  not  binding,  76. 

demand  of,  sufficient,  76. 

SINKING   FUND,  for  bonds  purchased  at  premium,  136. 
SOLE   TRUSTEE,  on  death  of,  trust  vests  in  successor,  51-52, 
54. 

on  death  of,  title  passes  to  whom,  3,  51-52,  54. 
SOVEREIGN,  may  be  a  trustee,  15. 
SPECIAL  LAW,  sale  under,  67. 

SPECULATION,  with  trust  funds  improper,  32,  110-111,  116. 
SPECULATIVE,  investments  improper,  116. 

what  are  speculative  investments,  106,  107,  116. 

investments  should  be  converted,  105. 
SPENDTHRIFT  TRUSTS,  79,  166. 

interest  of  possible  payees,  79,  158,  166. 
STATUTE,  may  provide  for  sale  of  trust  property,  67. 

of  limitations.    See  LIMITATIONS. 
STOCK.    See  FARMING  STOCK. 
STOCK,  certificate  should  stand  in  joint  names,  101. 

should  indicate  trust  on  their  face,  101. 

as  an  investment,  113-115. 

dividends  of,  belong  to  whom,  128,  129. 

liability  for  transfer  of,  182,  183. 
STOCKHOLDER  IN  CORPORATION,  trustee  is,  27. 

beneficiary  is  not,  27,  184. 

trustee  is  liable  as,  27. 

beneficiary  is  not,  27,  184. 
STRANGER,  property  followed  into  hands  of,  179-182. 

aiding  in  breach  of  trust  liable,  182. 


INDEX  221 

STRANGER  (continued). 

cannot  require  information  from  trustee,  146,  171. 

trustee's  liability  to.  See  LIABILITIES. 
SUBPOENA,  where  had,  168,  169,  189-190. 
SUCCESSOR,  not  liable  for  acts  of  predecessor,  95,  101,  148-149. 

should  examine  predecessor's  accounts,  95,  101. 

not  bound  to  receive  property  tendered,  95. 

effect  of  taking  the  property,  156-157. 

gets  title  how,  11-12,  51-52. 
SUIT,  trustee  has  general  power  to  sue  and  defend,  26,  75-76. 

duty  to  press,  88,  102. 

necessary  parties  to,  9,  22,  26,  75,  98. 

admissions  in,  are  binding  when,  76,  159. 

compromise  of,  76,  88. 

expense  of,  allowed,  35,  75. 

beneficiaries'  rights  in  actions,  26-27. 

beneficiary  may  sue  or  defend  in  trustee's  name,  169,  183. 

against  trustee,  in  what  jurisdiction,  168,  188-191. 
SUPPORT,  65. 

power  and  duty  to  support  beneficiary,  83-84,  173. 

when  others  have  duty,  84. 

trustee's  discretion  as  to  quantity,  80-83. 

when  court  will  review  discretion,  81. 

from  principal  and  income,  80. 

how  apportioned  among  beneficiaries,  81-82. 

special  power  often  given,  79. 

usually  discretionary,  79. 

possible  recipient  not  interested  in  trust,  79. 

of  beneficiary  or  family  in  spendthrift  trusts,  167. 
SURETIES,  may  be  required  on  trustee's  bond,  12. 

on  bonds  of  executor,  liable  for  acts  as  trustee  when,  6,  14. 

expense  of  surety  company  allowed,  35. 

liabilities  of,  13,  note  1. 

making  good  loss,  subrogated  to  trustee's  claim,  179,  note  3. 
SURVIVING  TRUSTEE,  office  passes  to  survivors,  46. 

takes  title  on  death  of  trustee,  51. 

TAXES,  duty  to  pay,  29,  102. 

trustee  is  personally  liable,  29. 

where  taxes  are  payable,  29,  193. 

beneficiary  may  be  liable  for,  184. 

how  apportioned,  principal  or  income,  139-140. 
TEMPORARY  TRUSTEE,  appointed  when,  7,  170. 
TENANT,  should  attorn  to  new  trustee,  102. 
TENANTS  IN  COMMON,  trustees  are  not,  45. 


222  INDEX 

TERM,  of  lease  trustee  may  grant,  73-74. 
TERMINATION  OF  TRUST,  19-24. 

by  conveyance  to  beneficiary,  173-175. 

commissions  on,  38,  145. 
THINGS,  trusts  for,  157. 
TIMBER,  when  income  or  principal,  125. 
TITLE,  trustee  takes  absolute  to  personal  property,  44. 

trustee  takes  none  in  code  States,  44. 

trustee  takes  what  estate  is  necessary  in  real  estate,  44. 

to  property  should  stand  in  joint  names,  99,-  101. 

vests  in  others,  on  disclaimer  of  one,  5. 

to  property  necessary  to  complete  appointment,  11. 

may  vest  by  provisions  of  settlement,  11. 

decree  for  conveyance  to  new  trustee,  12,  99. 

may  vest  in  new  trustee  by  statute,  11. 

to  property,  how  it  passes  to  successor,  11,  50. 

passes  to  remainderman  how,  50,  144. 
TORT,  beneficiary  not  liable  in,  184. 

trustee  liable  in  tort,  31,  146. 

TRACING  trust  property  into  hands  of  stranger,  180. 
TRANSFER   OF   PROPERTY,  to  new  trustee,  11,  99. 

to  remainderman.     See  REMAINDERMAN. 
TRANSFER  OF  STOCK,  liability  for,  183. 
TRANSFER  OF  TRUST  PROPERTY.    See  ALIENATION. 
TRANSMISSION    OF    ESTATE,    on    death    of    trustee.      See 

"  DEATH." 
TRUST,  differs  from  agency,  26. 

may  be  refused.    See  DISCLAIMER. 

will  not  fail  for  want  of  trustee,  7. 

cannot  be  delegated,  88. 

enforced  where,  168,  169,  189-190. 
TRUST   COMPANY,  may  be  a  trustee,  15. 

advantages  and  disadvantages  of,  17. 
TRUST  PROPERTY.    See  PROPERTY. 
TRUST  TERMINATED,  19-24,  173. 
TRUSTEE,  can  refuse.    See  DISCLAIM. 

cannot  abandon  trust,  19. 

removal  of.     See  REMOVAL. 

may  resign.     See  RESIGNATION. 

temporary  trustee  may  be  appointed,  7,  170. 

appointment  of.    See  APPOINTMENT. 

executor  performing  such  duties  is  a  trustee,  6,  14. 

any  person  intermeddling  is  trustee.  13.x 

who  of  two  sets  of  trustees  is  entitled  to  act,  14-15. 

who  can  be,  15. 


INDEX 

TRUSTEE  (continued). 

should  be  capable,  16. 

who  is  unfit  to  be,  16. 

must  exercise  trust  himself,  57,  88,  90. 

managing  and  passive  trustees,  89-90. 

is  owner  of  trust  property,  25,  26. 

the  estate  of.    See  ESTATE  and  TITLE. 

right  to  possession  of  property.     See  POSSESSION. 

can  take  no  benefit  from  ownership,  32. 

cannot  purchase  at  sale,  32,  70,  155. 

good  faith  required,  2,  32,  85,  87. 

cannot  have  adverse  interest,  2,  87. 

contracts  with  beneficiary,  35,  85,  86. 

gifts  from  beneficiary,  86. 

may  act  as  counsel,  attorney  or  broker  when,  34,  90. 

must  keep  accounts.    See  ACCOUNTS. 

powers.    See  TABLE  OF  CONTENTS,  pp.  xi,  xii. 

duties.    See  TABLE  OF  CONTENTS,  pp.  xiii  to  xvi. 

compensation.    &«e  COMPENSATION. 

his  expenses.    See  EXPENSES. 

liabilities.  See  LIABILITIES  ;  also  TABLE  OF  CONTENTS,  p.  xvi. 

may  get  instructions  of  court.    See  INSTRUCTIONS. 

single  trustee  may  do  what.      See  SINGLE  TRUSTEE. 

death  of.    See  DEATH  AND  EXECUTOR. 

is  discharged  how,  19,  155,  176. 
"  TRUSTEE,"  on  certificate  is  notice,  47,  182. 

signature  "  as  trustee  "  effect,  28,  78,  146. 
TRUSTEESHIP,  not  always  desirable,  2. 

is  a  relationship,  2,  83. 

not  an  agency,  2,  26. 

is  a  personal  confidence,  88. 

See  DELEGATE. 

cannot  be  abandoned,  19. 

may  be  resigned,  when  and  how,  19-20. 

removal  from,  when,  16,  22,  194. 

passes  to  whom.    See  SUCCESSOR  and  DEATH. 

may  be  ended  how,  11,  19-24,  173. 

UNAUTHORIZED   SALE,  confirmed  when,  68. 
UNDIVIDED    PROPERTY,  should  be  converted,  106. 
UNDUE    INFLUENCE.    See  FRAUD. 
UNFAITHFUL  TRUSTEE,  may  lose  compensation,  39. 
UNFIT  TRUSTEE,  when  new  trustee  in  place  of,  8. 

who  is  unfit  to  be  a  trustee,  16. 

may  be  appointed  by  creator  of  trust,  18. 


224  INDEX 

UNFRIENDLY  TRUSTEE,  may  be  removed,  23. 
UNPRODUCTIVE    PROPERTY,  should  be  converted,  100-107. 

converted,  is  partly  income,  123. 

USE,  beneficiary's  right  to  use  trust  property,  45,  102,  107,  125, 
175. 

trustee  cannot  use,  32. 

VACANT   LAND,  should  be  converted,  106. 

taxes  on,  how  chargeable,  139. 

VESTING  OF  TITLE  TO  PROPERTY.     See  TITLE. 
VOTE,  beneficiary  not  qualified  to,  as  owner,  159. 

trustee  votes  as  stockholder,  27. 

trustee  enjoined  from  voting  against  beneficiary's  interest, 
170. 

WASTE,  cause  for  removal  of  trustee,  23. 

WASTING  INVESTMENT,  dividends  on  apportioned,  126. 

should  be  converted,  106. 
WIFE,  may  be  trustee  for  husband,  17. 
WILFUL  BREACH  OF  TRUST,  cause  for  removal,  23. 


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UNIVERSITY  OF  CALIFORNIA 
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UC  SOUTHERN  REGIONAL  I 


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